Do I pay taxes if I live in Puerto Rico?

Yes, but the structure differs from the mainland US. As a bona fide PR resident, you generally do not owe US federal income tax on PR-sourced income; instead you pay PR’s own income tax, which runs progressive from roughly 7 percent to 33 percent across brackets. US-sourced income (mainland wages, mainland-sourced dividends and capital gains, US-sourced pensions, Social Security) typically remains taxable by the US federal government, with normal IRS filing required. PR also has IVU sales tax (11.5 percent in most municipalities, the highest in the US system), property tax (low by mainland standards), and municipal licence and patent fees for businesses. Federal payroll taxes (Social Security and Medicare) still apply if you work for a mainland employer. Bona fide residency requires presence on the island for 183 days a year plus tax-home and closer-connection tests. Tax planning around a PR move benefits materially from a CPA who handles both systems. For cost context, see our Puerto Rico cost of living page.