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Guam Tax Guide 2026: Mirror Code System, IRC §931 Exemption & Guam DRT Filing

Daniel · CountryTaxCalc Updated April 2026
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KEY INSIGHT
Guam operates a 'mirror code' income tax system — effectively a copy of the US Internal Revenue Code, but administered by the Guam Department of Revenue and Taxation (Guam DRT) rather than the IRS. Bona fide residents of Guam file their tax return with Guam DRT and pay Guam income tax, not federal income tax. Under IRC §931, Guam-source income of bona fide Guam residents is exempt from US federal income tax. This creates a significant benefit: Guam residents effectively avoid the federal income tax layer on their Guam-sourced income, filing only with Guam DRT at the same rates as the US federal system.
At a glance

Key Facts

Guam Mirror Code Tax System
The Guam Territorial Income Tax (GTIT) mirrors the US Internal Revenue Code — Guam DRT uses the same brackets, deductions, credits, and filing requirements as the federal system, with 'Guam' substituted for 'United States.' 2026 federal/Guam tax brackets (single filer): 10% on first $11,925; 12% on $11,925–$48,475; 22% on $48,475–$103,350; 24% on $103,350–$197,300; 32% on $197,300–$250,525; 35% on $250,525–$626,350; 37% above $626,350. Bona fide Guam residents file a Guam DRT return (form 1040GU), not a federal return for Guam-sourced income.
IRC §931: The Federal Exclusion for Guam Residents
IRC §931 is the critical provision: bona fide residents of Guam who have Guam-source income may exclude that income from US federal gross income. Filing requirement: bona fide Guam residents with income solely from Guam sources file ONLY with Guam DRT (not the IRS). If they also have US-source income (e.g., federal salary, mainland investments), they must file both a Guam DRT return and a federal return. Military members stationed in Guam do NOT become bona fide Guam residents — they retain their home state tax domicile and file with the IRS, not Guam DRT.
Bona Fide Residency in Guam
Bona fide residency in Guam is determined under IRC §937, using a three-part test: (1) Presence test — physically present in Guam for at least 183 days in the tax year; (2) Tax home test — Guam is your primary place of business/employment; (3) Closer connection test — closer connection to Guam than to the US or any other location. Federal employees and military stationed in Guam do NOT meet the closer connection test and are not bona fide Guam residents for §931 purposes. Private sector workers, retirees, and Chamorros who genuinely live and work in Guam are typically bona fide residents.
Guam Real Property Tax
Guam's real property tax is administered by the Guam Department of Land Management. Assessed value is set by the Department of Revenue and Taxation. Tax rate: generally 0.5% to 1% of assessed value annually — among the lowest effective property tax rates under US jurisdiction. Homestead exemptions are available for primary residences. Compared to US states, Guam property taxes are very low. Property in Guam can be purchased by US citizens and foreign nationals (with certain restrictions on alienation by non-Chamorros under Chamorro Land Trust provisions).
Guam Business Tax Considerations
Businesses operating in Guam pay Guam income tax to DRT at the mirror code rates. Guam also levies a Business Privilege Tax (BPT) — a gross receipts tax at 5% on most business transactions. BPT is in addition to income tax. Guam has a 2% gross receipts tax on services. These gross receipts taxes are not income taxes and are not creditable as foreign taxes on US returns (they are not levied on income). Guam's FREEPORT status exempts many imported goods from US Customs duties — historically an economic advantage for the island's retail and tourism economy.
Introduction

Guam is a US territory in the Western Pacific — residents are US citizens, but the island has its own separate tax authority, the Guam Department of Revenue and Taxation (DRT). Guam's tax system is unique in the US territorial framework: rather than following the same tax rules as the 50 states, Guam uses a 'mirror code' — the Guam Territorial Income Tax (GTIT), which replicates the US Internal Revenue Code with 'Guam' substituted for 'United States.' This means Guam tax brackets, deductions, and rates mirror the federal system, but the revenue goes to the Guam government, not the federal Treasury. The critical provision for most Guam residents is IRC §931: bona fide residents of Guam exclude their Guam-source income from US federal gross income entirely, avoiding the federal income tax layer on that income.

Section 01

How Tax Filing Works for Guam Residents

Understanding who files where is the central question for Guam tax compliance:

Bona fide Guam resident with all income from Guam: File only with Guam DRT (Form 1040GU). No federal 1040 required (IRC §931 excludes Guam income from federal gross income). Pay Guam income tax at mirror code rates. Deadline: April 15.

Bona fide Guam resident with some income from the US: Must file BOTH a Guam DRT return (for Guam-source income) AND a federal return (for US-source income). Guam-source income is excluded from the federal return. US-source income is taxed federally and excluded from the Guam return. This dual-filing is complex — tax software handling both is limited.

Non-resident with Guam income: File only with Guam DRT on the Guam-source income portion. Federal return covers any US-source income.

Military stationed in Guam: NOT a bona fide Guam resident — file federal 1040 with IRS and state return for your home state. Do not file with Guam DRT unless you have private income from Guam sources.

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FAQ

Frequently Asked Questions

Do I pay federal income tax if I live and work in Guam?

If you are a bona fide resident of Guam with income entirely from Guam sources, you do NOT pay federal income tax on that Guam income — it is excluded under IRC §931. You pay Guam Territorial Income Tax to the Guam DRT at the same rates as the US federal system, but that revenue stays with the Guam government. However, if you have any income from US sources (investments on the mainland, US federal employment, etc.), you must file a federal return for that US-source income. The practical result for most Guam private sector workers: one tax return to Guam DRT, no federal return required.

How does the Guam mirror code differ from the US tax code?

Guam's Territorial Income Tax (GTIT) is a copy of the US Internal Revenue Code with 'Guam' substituted for 'United States' wherever relevant. This means: same tax brackets; same standard deduction amounts; same dependent exemptions and child tax credit amounts; same itemized deduction rules; same self-employment tax rates. The key practical difference is the filing destination (Guam DRT, not IRS) and the §931 exemption. Some federal provisions don't have a Guam equivalent (e.g., certain federal credits or programs specific to the 50 states). Guam-specific laws also modify some provisions — consult a Guam tax professional for complex situations.

What if I'm a federal employee or US military stationed in Guam?

Federal employees and US military stationed in Guam are NOT bona fide Guam residents for §931 purposes — they retain tax domicile in their home state. Federal civilian employees in Guam file a federal 1040 with the IRS and a state return for their home state. Military members file a federal return and their home state return if applicable. They do NOT file with Guam DRT. Key distinction: the nature of the presence in Guam (temporary assignment vs. genuine relocation as primary domicile). If you are a civilian who voluntarily relocated to Guam for private employment and have established genuine residency, §931 analysis applies.

Are there sales taxes or other taxes in Guam?

Guam has no general sales tax in the US state sense. Instead, Guam levies a Gross Receipts Tax (GRT) on businesses at 5% of gross receipts — this is embedded in prices for goods and services (similar to a sales tax from the consumer perspective but levied on the business, not the consumer). Guam also has a Use Tax of 5% on items imported for personal use. Hotel taxes: 11% Occupancy Tax. Fuel taxes apply. Real property tax is assessed at low rates (approximately 0.5–1%). There is no Guam estate or inheritance tax. Guam is duty-free for US Customs purposes for goods purchased in Guam and brought to the US (up to $800 exemption per visit, same as international travel).

Can I move to Guam to reduce my US taxes?

The §931 benefit is real but requires genuine bona fide residency — not just spending 183 days to establish presence. The IRS applies the three-part test (presence, tax home, closer connection) strictly. Establishing Guam residency purely for tax benefits while maintaining your true economic and personal life elsewhere would likely fail the closer connection test. That said, many Americans genuinely relocate to Guam for work, military family connections, or lifestyle reasons and legitimately benefit from §931. Guam's FREEPORT status, tropical climate, and US citizen status without mainland federal income tax on island earnings can be genuinely beneficial for the right situation.
Disclaimer:This guide provides general tax information for educational purposes only. Guam's mirror code tax system and IRC §931 bona fide residency rules are complex and fact-specific. Military, federal employee, and non-resident rules differ significantly. Consult a Guam DRT registered tax professional and/or a US tax attorney for advice specific to your situation. Nothing in this guide constitutes tax or legal advice.
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