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HEAD-TO-HEAD TAX COMPARISON · 2026

COUNTRY A United States VS COUNTRY B Panama

Side-by-side analysis of income tax, effective rates, and take-home pay for United States and Panama in 2026.

Daniel · CountryTaxCalc Updated May 2026 Tax Comparison 2026
Calculate your take-home → See all comparisons →
OVERVIEW
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.
Section 01

The Big Picture

Top-line rates and effective take-home for a typical earner — including income tax, social contributions, and applicable surcharges.

🇺🇸
COUNTRY A
United States
TAX RATE
10-37%
Federal + State Tax
Progressive federal + state taxes
🇵🇦
COUNTRY B
Panama
TAX RATE
0-25%
Territorial Tax System
Foreign income tax-free
TYPICAL ANNUAL DIFFERENCE
Moving from Panama → United States at $100,000
$15,000
That's $1,250/month back in your pocket
Section 02

Tax Savings by Income Level

Net take-home after all income tax, social contributions, and surcharges — for a single employee with no dependents.
GROSS 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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🇺🇸

United States Pros & Cons

+ PROS
  • Higher salaries: US median income $75K (vs Panama $15K local, $40-60K expat remote)
  • Better infrastructure: Roads, healthcare, utilities more reliable than Panama
  • Career opportunities: Tech, finance, professional services pay 2-3x more than Panama
  • Strong currency: USD stable (Panama uses USD but no Fed protection)
  • Medicare/Social Security: Domestic access to programs (limited abroad)
− CONS
  • High taxes: 10-37% federal + 0-13.3% state vs Panama 0% on foreign income
  • Expensive: Healthcare $7,700/year, housing 2-3x Panama costs
  • Worldwide taxation: IRS taxes all income globally (citizens abroad still file)
  • Complex tax system: Federal, state, local, payroll, capital gains
  • Student debt: Average $37K (Panama education cheaper, less debt culture)
🇵🇦

Panama Pros & Cons

+ PROS
  • Territorial tax: 0% tax on ALL foreign-sourced income (remote work, investments, pensions)
  • Easy residency: Friendly Nations Visa (50+ countries) = permanent residency in 6 months
  • Pensionado benefits: Retirees with $1K/month pension get 25% off flights, 50% off entertainment, property tax exemptions
  • Low cost: Panama City 40% cheaper than Miami, Boquete 60% cheaper
  • USD economy: Uses US dollar since 1904 (no currency risk for Americans)
− CONS
  • US expats still file: FEIE excludes first $132,900, but US taxes still apply above that
  • Lower local salaries: Panama jobs pay $15-30K (must work remotely for US/EU salary)
  • Weaker healthcare: Public system poor, private insurance $100-200/month (vs US $600+)
  • Infrastructure gaps: Power outages, water issues outside Panama City
  • FATCA reporting: US citizens must report foreign accounts >$10K (burdensome)
FAQ

Frequently Asked Questions

How much will I actually save as a US citizen moving to 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 $132,900 (2026). On $100K income, FEIE covers it all = $0 US tax + $0 Panama tax. Net savings: $18,289/year. Above $132,900, you pay US tax on the excess. Bonus: Panama cost of living is 40% lower (save another $20K/year).

What is Panama's territorial tax system?

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%).

What is the Friendly Nations Visa?

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).

Is Panama good for US retirees?

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.
From the brief
CY0%dividends, 60-day rule
PT20%flat rate, tech workers
GB39%non-dom regime gone
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