As U.S. tax rates rise and financial scrutiny increases, many millionaires are exploring new ways to protect their wealth. And one destination is rapidly becoming a top choice: Puerto Rico.

“A lot of folks don’t realize that Americans pay some of the highest taxes in the world, especially in states like California and New York,” said Andrew Lokenauth, a U.S. tax professional and founder of Fluent in Finance. “When you add up federal, state and local taxes, some people end up giving away over 50% of their income.”

Now, thanks to Act 60 and other local incentives, many are relocating to Puerto Rico not just for the island lifestyle — but for potentially saving hundreds of thousands of dollars annually in taxes.

Act 60: Just 4% Corporate Tax

Puerto Rico’s Act 60 tax program allows qualifying businesses to pay as little as 4% corporate tax on eligible income — a dramatic drop from the 21% federal corporate tax in the mainland U.S.

“I moved my consulting business there in March 2024,” said Lokenauth. “My effective tax rate dropped from around 45% to under 10% — that’s life-changing money I can reinvest back into growing my company.”

Erik Wright, founder of New Horizon Home Buyers, shared similar praise. “Puerto Rico’s Act 60 offers breathtaking tax relief. It can reduce your income tax rate to just 4%, saving high earners hundreds of thousands of dollars each year.”

One of Wright’s real estate partners slashed his annual federal tax bill from over $400,000 to just $40,000 after moving to Puerto Rico — all while keeping his U.S.-based business running smoothly.

Capital Gains: 0% Tax for Residents

Another huge perk for high-net-worth individuals is the capital gains tax exemption. Residents of Puerto Rico can avoid paying U.S. federal taxes on capital gains after meeting residency requirements.

“Back in Chicago, I was paying 20% federal plus 5% state tax on investment gains,” Lokenauth explained. “After relocating to San Juan, I sold long-term stock holdings completely tax-free — saving over $140,000.”

Crypto Profits? Zero Tax.

Puerto Rico also treats cryptocurrency gains differently than the mainland. While the U.S. taxes crypto profits up to 37%, Puerto Rico considers them tax-free for qualifying residents.

“I’ve met multiple crypto millionaires in my neighborhood who moved here just for the tax benefits,” said Lokenauth. “It’s one of the few places in the world where you can legally realize crypto gains tax-free.”

More Than Just Tax Savings

While the tax benefits are massive, there’s more to Puerto Rico’s appeal. The island offers:

• Tropical weather year-round
• World-class beaches and nature
• A blend of Caribbean and American culture
• No passport or immigration barriers for U.S. citizens
• Familiar comforts: U.S. currency, stores, and services

“San Juan feels just like a mainland U.S. city — but with palm trees and no snow,” joked Lokenauth. “The lifestyle upgrade combined with the tax advantages makes it a no-brainer for high earners.”