Panama Income Tax Calculator

Estimate what you owe under Panama’s personal income tax (ISR) on Panamanian-source income — instantly, for free.

Rates verified 2026

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How Panama personal income tax works

Panama taxes individuals only on Panamanian-source income under a progressive scale (ISR). Foreign-source income is generally exempt under Panama's territorial tax system — regardless of where you live, income earned outside Panama (a foreign salary, foreign clients, foreign investments) typically isn't taxed here.

2026 Panama ISR tax brackets

Panama’s personal income tax applies a 3-bracket progressive scale to Panamanian-source income:

$0 – $11,0000% — tax-free
$11,000.01 – $50,00015% on the amount over $11,000
Over $50,000$5,850 + 25% on the amount over $50,000

What deductions can reduce your Panama income tax?

Once your Panamanian-source income is established, several deductions can lower your taxable base — each with its own cap:

  • Mortgage interest on a primary residence in Panama — capped at $15,000
  • Retirement / pension contributions — the lower of 10% of gross income or $15,000
  • Charitable donations — capped at $50,000
  • Educational expenses
  • Medical expenses, student loan interest, health insurance premiums, and professional membership fees

What this calculator doesn’t include

This tool estimates personal income tax (ISR) only. It excludes Social Security contributions (CSS) and the ITBMS sales tax, which are calculated separately under different rules.

Frequently Asked Questions

Yes, completely free with no email or sign-up required. You get your full estimate instantly; we only ask for contact details if you choose to download a personalized PDF report or book a consultation.

No. Panama uses a territorial tax system, so income earned outside Panama — from a foreign employer, foreign clients, or foreign investments — is generally exempt from Panamanian income tax, regardless of where you live.

Broadly, income generated by work performed in Panama, by a Panama-registered company operating locally, from renting Panama real estate, or from professional services rendered within Panama.

No. This tool estimates personal income tax (ISR) only. Social security contributions (CSS) and the ITBMS sales tax are calculated separately and are not included in this estimate.

It applies the official 2026 ISR brackets and standard deduction rules to the figures you enter. Your actual liability can vary based on your specific documentation and circumstances, so we recommend confirming with a licensed CPA before filing.

Common deductions include mortgage interest on a primary residence in Panama, retirement contributions, educational and medical expenses, charitable donations, and certain insurance premiums — each subject to its own cap. See the calculator's 'Advanced deductions' section for the full list.