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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 April 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 …
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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Wise

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Transfer USD to Panama for rent, living expenses, or real estate purchases. Panama uses USD, so no conversion fees—just low transfer fees (0.5% vs bank's 3-5%).

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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 $126K, 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 $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).

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
PT38.4%−9.6 vs. headline
CY17.8%incl. 60-day rule
AE 0.0%substance required
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