Compare taxes and see how much you save moving from United States to Panama
The United States has progressive federal income tax rates from 10% to 37% plus state taxes, while Panama has territorial taxation where only Panama-sourced income is taxed at 0-25%. Moving to Panama can save $15,000+/year on $100k foreign income. However, US citizens must still file US taxes (FEIE helps). Panama offers Friendly Nations Visa for easy residency and Pensionado program for retirees. Cost of living in Panama City is 40% lower than major US cities. Popular with American retirees and digital nomads.
Federal + State Tax
Progressive federal + state taxes
Territorial Tax System
Foreign income tax-free
At $100,000 income:
That is $1,250/month back in your pocket!
| Income | US Tax | PA Tax | Savings | 10-Year |
|---|---|---|---|---|
| $50,000 | $6,790 | $0 | $6,790 | $67,900 |
| $100,000 | $18,289 | $0 | $18,289 | $182,890 |
| $200,000 | $45,689 | $0 | $45,689 | $456,890 |
| $500,000 | $153,689 | $0 | $153,689 | $1,536,890 |
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Get Travel Insurance for Panama →On $100,000 foreign income (remote work for US company), Panama charges 0% tax. In the US, you'd pay ~$18,289 federal + state tax. However, as a US citizen, you must still file IRS taxes. Use FEIE (Foreign Earned Income Exclusion) to exclude first $126,500 (2026). On $100K income, FEIE covers it all = $0 US tax + $0 Panama tax. Net savings: $18,289/year. Above $126,500, you pay US tax on the excess. Bonus: Panama cost of living is 40% lower (save another $20K/year).
Panama only taxes Panama-sourced income (work performed IN Panama, Panama real estate, Panama business). Foreign-sourced income is 100% tax-free: remote work for foreign companies, foreign investments, foreign pensions, foreign rental income. Example: Work remotely for US company from Panama City = $0 Panama tax. Open a Panama business serving US clients = still $0 Panama tax (clients abroad). Only if you serve Panama clients = Panama tax (0-25%).
Fast-track permanent residency for citizens of 50+ countries (USA, Canada, UK, EU, Australia, etc.). Requirements: (1) Economic ties to Panama ($5K bank deposit OR $200K real estate OR Panama company), (2) No criminal record. Process: 6-8 months to permanent residency. Benefits: Live/work in Panama indefinitely, path to citizenship (5 years), territorial tax applies. Cost: ~$3,000-5,000 in legal fees. Used by 10K+ Americans (2020-2025).
Yes, Panama is #1 expat retirement destination. Pensionado program for retirees with $1,000/month pension: 25% off domestic flights, 50% off entertainment/dining, 25% off utilities, 50% off hotel stays, property tax exemptions. Combined with 0% tax on US Social Security/pensions + 40% lower cost of living = retirement income goes 2-3x further. Popular areas: Boquete (mountain town, US expat community), Coronado (beach, 1 hour from Panama City), Panama City (urban, hospitals). Healthcare: Private insurance $100-200/month (vs US $600+), Johns Hopkins affiliate hospital in Panama City.