El Salvador now leaves income from abroad out of its income tax altogether. Since March 2024, a foreign pension, dividends from a portfolio held overseas, gains on foreign assets and money you bring into the country are not "income" under Salvadoran law, whether or not you live there.
This guide covers Salvadoran personal tax for people moving to or living in El Salvador in the 2026 tax year, which is the calendar year. El Salvador uses the US dollar, so every figure here is in dollars.
The key question is simple. Does your income come from El Salvador, or from abroad?
What's changed: Decree 969, in force from 22 March 2024, added a new rule to article 3 of the Income Tax Law: any income or capital received from a source abroad is not income for tax purposes, for residents and non-residents alike. It also repealed the old rules that taxed residents on foreign securities and foreign bank interest. Decree 293 raised the tax-free band from US$4,064 to US$6,600 a year (US$550 a month) from May 2025, the first rise since 2011. Decree 199 changed the Bitcoin Law: from the end of April 2025, businesses no longer have to accept bitcoin, but the bitcoin capital gains exemption stays.
📋 El Salvador tax at a glance for 2026
Topic | Details |
|---|---|
Tax year | The calendar year |
Tax system | Territorial. Income from any source abroad has been excluded since March 2024 |
Top income tax rate | 30% on taxable income above US$22,857.14. The first US$6,600 is tax free |
All-in on a US$100k salary | About 32%, including 7.25% to the AFP pension fund |
Foreign income | Not taxed, including foreign pensions, dividends, interest and gains |
Local dividends and gains | 5% final tax on dividends; 10% on gains on assets held over 12 months |
Bitcoin | Still legal tender in name, but accepting it is voluntary since 2025. No capital gains tax on bitcoin |
Inheritance and wealth tax | Wealth tax abolished in 1994. We found no inheritance tax |
Residence at a glance | Getting in: living in El Salvador for more than 200 consecutive days in a calendar year. Leaving: tested each year, and we found no exit tax |
Double tax treaties | One confirmed in force, with Spain |
Foreign income: excluded since March 2024
Image 1 — El Salvador doesn't tax income from abroad
El Salvador always taxed mainly local income: article 16 of the Income Tax Law covers income from property, activities, capital and services in the country, even if you're paid abroad. Until 2024, some rules also reached residents' foreign securities and foreign bank interest.
Decree 969 closed that gap. Article 3(4) now says that all amounts received from abroad, any capital movement, pay or other receipt, in cash or in kind, "from any kind of source abroad" is not income, whether the person is domiciled in El Salvador or not. The same decree repealed the parts of articles 14-A, 16 and 27 that taxed foreign securities, foreign financial instruments and deposits in foreign banks.
Not taxed: a foreign pension, dividends and interest from a portfolio held abroad, rent from a property abroad, gains on foreign assets, and savings you transfer into El Salvador.
Taxed: a salary for a job done in El Salvador, fees for services you provide in El Salvador, and income from Salvadoran property, companies and investments.
The grey area is remote work. Article 16 says services provided in El Salvador produce Salvadoran income even when paid from abroad, while article 3(4) excludes pay from a source abroad. If you work from El Salvador for a foreign employer or clients, take advice on which rule wins for you, and keep evidence of where the payer and the work are based.
👉 Asamblea Legislativa: Decree 969 of 2024, excluding foreign-source income (in Spanish)
👉 Asamblea Legislativa: Income Tax Law, consolidated text (in Spanish)
When you become tax resident in El Salvador
Salvadoran law uses the word "domiciled" for tax residence. The tax authority (Dirección General de Impuestos Internos, DGII) explains in its income tax return instructions that individuals living in El Salvador, temporarily or permanently, for more than 200 consecutive days in a calendar year are domiciled for tax purposes.
Being domiciled decides how your Salvadoran income is taxed: domiciled individuals use the progressive scale below, while non-domiciled individuals pay a flat 30% on their net Salvadoran income. Foreign income is excluded either way.
How you stop being resident
Residence is tested each calendar year, so you stop being domiciled in a year when you don't live in El Salvador for more than 200 consecutive days. We found no exit tax for individuals. If you hold a residence permit, note that pensionado and rentista status can be lost after more than six months abroad in a calendar year, unless there's a good reason.
Income tax rates for 2026
El Salvador has one annual scale for domiciled individuals, set by article 37 of the Income Tax Law. Decree 293 raised the tax-free band to US$6,600 from May 2025. Each band adds a fixed amount plus a percentage of the income above the band's starting point.
El Salvador income tax rates for 2026 (annual taxable income)
Taxable income | Tax |
|---|---|
Up to US$6,600 | 0% |
US$6,600.01 to US$9,142.86 | US$212.12 plus 10% of the excess over US$6,600 |
US$9,142.87 to US$22,857.14 | US$720 plus 20% of the excess over US$9,142.86 |
Over US$22,857.14 | US$3,462.86 plus 30% of the excess over US$22,857.14 |
Source: Income Tax Law, article 37, as amended by Decree 293 of 30 April 2025.
Employees earning up to US$9,100 from salary alone get a fixed US$1,600 deduction. Compulsory AFP pension contributions are not taxable income.
Worked example
You're single and work for a Salvadoran employer in 2026, earning US$100,000 a year, or about US$8,333 a month.
Your AFP pension contribution at 7.25% is US$7,250 a year. We also assume an ISSS health contribution of US$360 a year (see social security below).
Your taxable income is US$92,390, so income tax is US$3,462.86 plus 30% of US$69,532.86: US$24,322.72.
Your all-in bill is about US$31,933, or 32% of your salary, leaving you about US$68,067. Your employer pays a further 8.75% to the AFP on top of your salary, plus its own ISSS share.
👉 Asamblea Legislativa: Decree 293 of 2025, new income tax table (in Spanish)
Freelancing in El Salvador
If you work for yourself in El Salvador, your net profit is taxed on the same scale, and you file an annual return. Fees for work you physically do in El Salvador can be Salvadoran-source even if your clients are abroad.
On US$100,000 of net profit, income tax is US$26,605.72, or about 27%.
Social security is lighter than for employees. Self-employed people join the AFP pension system by signing a contract with an AFP and pay the full 16% themselves, on an income they declare that can't be below the monthly minimum wage. The ISSS runs a special health scheme for the self-employed at US$40 a month (US$56 for family cover), open to people aged 18 to 60. We treat both as optional. Even if you paid the pension on the minimum base, your all-in cost would be about 27%.
New technology investments, such as software and artificial intelligence projects, can apply for a 15-year income tax exemption under a 2023 law. It needs approval from the Ministry of Economy, so it isn't automatic.
👉 ISSS: special health scheme for self-employed workers (in Spanish)
👉 Asamblea Legislativa: Law on Promoting Innovation and Technology Manufacturing (in Spanish)
Crypto, investments and pensions
Is crypto taxed in El Salvador? Bitcoin isn't, at least on gains. Article 5 of the Bitcoin Law says exchanges in bitcoin are not subject to capital gains tax. Decree 199 of January 2025 rewrote the law: bitcoin is still described as legal tender, but accepting it is now voluntary and only private parties may accept it. The capital gains exemption was kept.
Other crypto has no specific rule, but gains on crypto held on foreign exchanges or wallets fall under the foreign income exclusion. Digital assets issued under the 2023 Digital Assets Issuance Law are exempt on their returns and on sale. If you trade crypto as a business in El Salvador, take advice.
Salvadoran investments are taxed as follows:
Dividends from Salvadoran companies: 5%, withheld as a final tax.
Capital gains: 10% on the net gain, unless you sell within 12 months of buying, in which case the gain is added to your other income and taxed on the scale.
Bank interest: interest on deposits with supervised Salvadoran banks and cooperatives is exempt for a domiciled individual whose average monthly balance is under US$25,000.
Your first home: the gain is exempt if you don't trade property and the price is within a cap linked to the minimum wage.
Foreign investments are a different story. Dividends, interest and gains on a portfolio held outside El Salvador are excluded from income tax.
Pensions are doubly protected. Article 4 of the Income Tax Law lists pensions among non-taxable income, and a foreign pension is foreign-source anyway. El Salvador repealed its wealth tax in 1994, and we found no inheritance tax in force.
👉 Asamblea Legislativa: Decree 199 of 2025, reform of the Bitcoin Law (in Spanish)
👉 Asamblea Legislativa: Digital Assets Issuance Law, article 36 tax treatment (in Spanish)
👉 Asamblea Legislativa: repeal of the Wealth Tax Law, 1994 (in Spanish)
Social security
Employees in El Salvador pay into two systems.
Pension (AFP): under the 2022 Comprehensive Pension System Law, the contribution is 16% of salary, with 7.25% paid by you and 8.75% by your employer. The base can't be lower than the minimum wage. We found no upper limit in the law, so our example applies 7.25% to the whole salary. Your compulsory contributions are not taxable income.
Health (ISSS): the Salvadoran Social Security Institute covers all employees, whatever their employment contract. We couldn't confirm the current rate and ceiling on an ISSS page, so our estimate assumes 3% on pay up to US$1,000 a month (US$30 a month at most). With no ceiling, the all-in rate would be about 34%, still the same rating.
If you retire to El Salvador on a foreign pension and don't work, you don't pay into either system. You'll want private health insurance.
👉 Asamblea Legislativa: Comprehensive Pension System Law, articles 14 to 16 and 26 (in Spanish)
Double tax treaties
Does El Salvador have double tax treaties? Very few. The one we could confirm in force is with Spain: signed in Madrid on 7 July 2008 and in force since 13 August 2009. The Ministry of Finance doesn't publish a list we could read online, and we found no treaty with the UK, the United States or Canada.
The short list matters less than usual, because El Salvador doesn't tax your foreign income in the first place.
👉 Spanish Tax Agency: Spain and El Salvador double tax treaty
Residence routes: no nomad visa, but other ways to stay
El Salvador has no digital nomad visa. The Special Migration and Foreigners Law offers other long-stay routes that suit people with income from abroad.
Rentista: stable income from abroad of at least four monthly minimum wages for commerce and services, which is US$1,635.20 a month at the US$408.80 wage in force since June 2025. It rises to six minimum wages (US$2,452.80) if two or more family members come with you. Rentistas can't do paid work in El Salvador, except some specialised or teaching work for the State.
Pensionado: a permanent foreign pension of at least three monthly minimum wages, which is US$1,226.40 a month.
Government programmes: since Decree 286 of May 2025, foreigners who join programmes promoted by the government, such as investment or donation schemes, can get permanent residence directly, for a fee of US$690. The amounts are set by each programme, not by the law, so check them with the official programme before you commit.
Pensionados and rentistas can also import household goods up to US$20,000 and a car up to US$25,000 free of import duty.
👉 Asamblea Legislativa: Special Migration and Foreigners Law, articles 144 to 148 (in Spanish)
👉 Ministerio de Trabajo: minimum wage of US$408.80 from 1 June 2025 (in Spanish)
Who is El Salvador good for?
How does El Salvador compare for different kinds of mover? Ratings are relative to the 150+ countries TaxPilot covers, based on 2026 rules and the all-in cost including compulsory contributions.
☑️ Who is El Salvador good for? Tax ratings for expats in 2026
Expat profile | El Salvador rating | Why |
|---|---|---|
Employees | Poor | About 32% all-in on a US$100k salary for a job done in El Salvador: income tax at up to 30%, plus 7.25% to the AFP pension fund and a small ISSS health contribution. The foreign income rule doesn't help with a local salary. |
Freelancers (self-employed) | Moderate | About 27% income tax on US$100k of Salvadoran-source profit, on the same 0% to 30% scale. Pension and ISSS health cover are optional for the self-employed. Truly foreign-source fees are excluded, but work you physically do in El Salvador can count as local. A 15-year exemption exists for approved technology projects, but it needs a Ministry of Economy qualification, so we don't count it. |
Retirees | Excellent | 0% on a US$40k foreign pension plus US$20k of foreign investment income, because foreign-source income is outside the tax since March 2024. Pensions are also listed as non-taxable income. The wealth tax was abolished in 1994 and we found no inheritance tax. |
Crypto gains | Excellent | The Bitcoin Law says exchanges in bitcoin aren't subject to capital gains tax, and that article survived the 2025 reform. Gains on crypto held outside El Salvador are foreign-source anyway. Digital assets issued under the 2023 Digital Assets Issuance Law are exempt too. |
Investment income | Excellent | Dividends, interest and gains from a portfolio held outside El Salvador are excluded from income tax. Local investments are taxed: 5% on dividends from Salvadoran companies and 10% on capital gains held over 12 months. |
Digital nomad visa | Moderate | There's no digital nomad visa. The practical long-stay route is rentista residence, which needs at least US$1,635.20 a month of income from abroad and bars paid work in El Salvador. Pensionado residence needs US$1,226.40 a month. |
Filing and deadlines
The tax year runs from 1 January to 31 December. The annual income tax return (form F-11) must be filed within four months of the end of the year, so the 2026 return is due by 30 April 2027.
Employers withhold income tax from salaries each month.
Employees whose only income is a salary of up to US$9,100 don't need to file.
Other employees whose only income is a salary taxed at source also don't need to file, unless their income is over US$60,000 a year or tax wasn't withheld. You can still file to claim a refund.
If you have other Salvadoran income, such as freelance profit or rent, you file a return.
Tax withheld on Salvadoran dividends is final, so you don't add them to your return.
Frequently asked questions
Does El Salvador tax foreign income?
No. Since Decree 969 took effect in March 2024, all income and capital received from a source abroad is excluded from income tax, whether or not you're domiciled in El Salvador. That covers foreign pensions, dividends, interest and gains on assets held abroad.
When do you become tax resident in El Salvador?
The tax authority treats you as domiciled if you live in El Salvador, temporarily or permanently, for more than 200 consecutive days in a calendar year. Domiciled people use the progressive scale; non-domiciled people pay a flat 30% on Salvadoran income.
What are the income tax rates in El Salvador in 2026?
The first US$6,600 of taxable income is tax free. Above that, the scale has bands at 10%, 20% and 30%, each with a fixed amount, and the 30% band starts at US$22,857.14.
Is bitcoin taxed in El Salvador?
Gains on bitcoin aren't. The Bitcoin Law says exchanges in bitcoin aren't subject to capital gains tax, and the 2025 reform kept that rule while making acceptance of bitcoin voluntary. Crypto held abroad is foreign-source and excluded anyway.
Does El Salvador have a digital nomad visa?
No. Remote workers usually look at rentista residence, which needs at least US$1,635.20 a month from abroad and bars paid work in El Salvador, or pensionado residence at US$1,226.40 a month of foreign pension.
How many double tax treaties does El Salvador have?
Very few. The one we could confirm in force is with Spain, since 13 August 2009. We found no treaty with the UK, the United States or Canada, which matters less because foreign income isn't taxed.
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Important information
This article is general information and does not constitute tax, legal, immigration or financial advice, and does not create a client relationship. Tax outcomes depend on travel history, income sources, treaty status and the law applying to the relevant year. Rates, thresholds and regimes change, and some measures described may be proposed rather than enacted; this article reflects our understanding as at the date of publication. Obtain advice from a suitably qualified professional before acting or refraining from action.
