Employer Tax Contributions

Tax Type	Rate (Employer)	Base
FICA - Social Security	6.2%	First $176,100 of wages
FICA - Medicare	1.45%	All wages
FUTA (Federal Unemployment Tax Act)	0.6%	First $7,000 of wages
SUTA (State Unemployment Tax Act)	1.40% – 5.40% (2.90% for new employers)	Varies

Filing & Compliance

• Form 941 (Federal Income Tax, Social Security, Medicare) is due quarterly by the last day of the month following the quarter end (April 30, July 31, October 31, January 31).
• Form 499 R-1 (Puerto Rico Income Tax Withheld) is due quarterly by the 15th day of the month following the quarter end (April 15, July 15, October 15, January 15).
• Form 940 (Federal Unemployment Tax) is due annually by January 31.

In Puerto Rico, employee tax deductions consist of federal and state income tax, Social Security, and Medicare, alongside other potential deductions like those for retirement plans and union dues.

Federal Taxes

• Social Security: 6.2% of earnings up to a maximum of $160,200 for 2025.
• Medicare: 1.45% of all earnings. An additional 0.9% Medicare tax applies to earnings above $200,000 for single filers, $250,000 for joint filers, and $125,000 for married individuals filing separately.
• Federal Income Tax: Withholding is determined by the employee's W-4 form and involves tax brackets ranging from 0% to 37%.

Puerto Rico Income Tax

• Withholding: Based on Form 499 R-4, using either the percentage or wage bracket method.
• Rates and Brackets: Progressive rates apply, ranging from 0% for incomes up to $9,000 to 33% for incomes over $61,500. There is an exemption from income tax withholding for employees aged 16 to 26 on the first $40,000 of taxable wages.
• Deductions: Itemized deductions are available for charitable contributions (up to 50% of adjusted gross income), education expenses (student loan interest, educational IRA contributions), medical expenses (above 6% of adjusted gross income), mortgage interest (up to $35,000 or 30% of AGI, whichever is lower) and casualty losses. There is no standard deduction. Personal exemptions are $3,500 per individual, $7,000 for married couples filing jointly, and $2,500 for each dependent. An additional veteran's exemption of $1,500 is also available. Contributions to retirement plans (Puerto Rican IRAs up to $5,000) are also deductible.

Other Deductions

• Union Dues: Deductible if stipulated in a collective bargaining agreement.
• Non-Profit Medical Services: Deductions for dues to non-profit medical-hospital associations are allowed.
• Savings Bonds: Deductions for the purchase of U.S. or Puerto Rico Savings Bonds are permitted.
• Credit Union Payments: Deductions for payments to credit unions are allowed.
• Charitable Contributions: Up to 3% of the employee's annual salary can be deducted for voluntary charitable contributions, subject to certain restrictions.
• Retirement Plans: Contributions to individual retirement accounts (IRAs) and the Pension Administration System ("Sistema de Retiro") are deductible.

Deadlines and Procedures

• Form 499 R-4: Employees complete this form to declare exemptions and determine withholding.
• Form SC 4809: Employers register their identification number with the Puerto Rico Treasury Department using this form.
• Tax Return Due Date: April 15th is the general deadline, with an extension available until October 15th.
• Tax Relief: Due to severe storms and flooding starting August 13, 2024, the IRS extended several deadlines to February 3, 2025. This includes quarterly estimated tax payments and some payroll and excise tax deadlines.

Employer Taxes

Employers also have tax obligations including:

• Federal Unemployment Tax Act (FUTA): 6% of the first $7,000 of each employee's wages, with a potential credit of up to 5.4% for state unemployment taxes paid.
• State Unemployment Tax Act (SUTA): Variable rates apply.
• Workers' Accident Compensation Insurance: Employers are responsible for this insurance.
• Withholding: Employers must withhold all applicable taxes and remit them to the appropriate authorities.

This information is current as of February 5, 2025, and might change in the future due to legislative updates. You should consult a tax professional for personalized advice.