Act 60, previously known as Acts 20 and 22, has been a cornerstone of Puerto Rico’s strategy to attract investors and high-net-worth individuals. Designed to encourage economic growth by offering tax incentives, why Act 60 changed 2025has historically provided significant benefits for new residents and business owners relocating to the island. However, in 2025, the legislation underwent notable changes, reshaping its structure, eligibility requirements, and impact on investors. Understanding these changes is essential for anyone considering relocation or investment in Puerto Rico.

The Purpose Behind Act 60

The original Act 60 was intended to stimulate Puerto Rico’s economy by attracting foreign capital and skilled professionals. Investors who relocated to the island could enjoy reduced income tax rates, exemptions on certain investment gains, and tax incentives for establishing export services. This framework made Puerto Rico a highly appealing destination for entrepreneurs, investors, and retirees seeking to minimize their tax burden while enjoying a tropical lifestyle. Over the years, these incentives contributed to a surge in real estate purchases, business developments, and overall economic activity.

Key Changes Implemented in 2025

In 2025, lawmakers revised Act 60 to address evolving economic conditions and ensure the long-term sustainability of Puerto Rico’s tax incentive programs. One significant change involved tightening eligibility criteria for new residents. Investors now need to demonstrate stronger ties to the island, including increased physical presence and proof of economic contribution. This adjustment aims to ensure that beneficiaries of the program actively participate in local economic growth rather than solely using Puerto Rico as a tax haven.

Another major modification affected the tax rates and exemptions available under Act 60. While the program continues to offer favorable conditions, certain types of passive income and capital gains now face adjusted tax treatments. These changes reflect a broader effort to balance the island’s fiscal needs with the objective of attracting investment. For some investors, this may require reevaluating business structures or investment strategies to maintain the maximum benefits under the revised law.

Impact on Investors

For investors, the 2025 changes introduce a more rigorous compliance environment. Those seeking to relocate businesses or personal assets to Puerto Rico must now plan carefully to meet the updated requirements. While the core benefits remain attractive—such as reduced tax rates on eligible income and exemptions for new residents—the emphasis on economic participation means that active engagement in the local economy is more critical than ever. Investors may also encounter increased reporting obligations and documentation to demonstrate compliance with residency and activity requirements.

Despite these adjustments, Act 60 continues to offer a competitive edge for entrepreneurs and high-net-worth individuals. The combination of a favorable climate, strategic geographic location, and access to U.S. markets ensures that Puerto Rico remains an appealing destination for investment. The revised Act 60 encourages sustainable economic growth while still providing a tax-efficient environment for those willing to integrate into the local community.

Impact on New Residents

New residents considering Puerto Rico as a home now face a more structured pathway to benefit from Act 60. Physical presence requirements have become more explicit, and individuals are encouraged to establish meaningful ties through local investments, employment, or business operations. This approach not only enhances compliance but also fosters deeper engagement with the island’s communities. For families and professionals, the revised law reinforces the need for long-term planning and strategic relocation decisions.

Additionally, real estate continues to play a pivotal role in the relocation process. Properties in urban centers and luxury developments are attractive for those seeking both lifestyle and investment returns. With Act 60’s incentives still offering significant tax advantages, new residents can enjoy a blend of financial benefits and high quality of life, provided they adhere to the updated rules.

Conclusion

The 2025 revisions to Act 60 represent a shift toward more accountable and sustainable investment incentives in Puerto Rico. Investors and new residents must navigate stricter eligibility requirements, updated tax structures, and enhanced residency obligations. Despite these changes, the program remains a compelling option for those seeking economic benefits while contributing to Puerto Rico’s growth. Careful planning and compliance are essential, but the revised Act 60 continues to offer opportunities for financial efficiency, lifestyle advantages, and active participation in a thriving Caribbean economy.