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The term "foreign country" does not include U.S. territories such as Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, or American Samoa.
In comparison to the different states of the United States, Puerto Rico is poorer than the poorest state of the United States, with 45% of its population living below the poverty line. However, when compared to Latin America, Puerto Rico has the highest GDP per capita in the region.
While the Commonwealth government has its own tax laws, Puerto Rico residents are also required to pay US federal taxes, but most residents do not have to pay the federal personal income tax.
The Internal Revenue Code of Puerto Rico (Spanish: Codigo de Rentas Internas de Puerto Rico) is the main body of domestic statutory tax law of Puerto Rico organized topically, including laws covering income taxes, payroll taxes, gift taxes, estate taxes, and statutory excise taxes.
15] For sourcing purposes, Puerto Rico is not treated as part of the United States.[ 16] Thus, compensation for services performed in Puerto Rico generally would be Puerto Rico-source income, and compensation for services performed in the United States generally would be U.S. source income.
Residents of Puerto Rico An individual who is a bona fide resident of Puerto Rico during the entire tax year is not subject to federal income tax on income derived from sources within Puerto Rico regardless of whether the individual is a U.S. citizen or alien.
Gross national income per capita in Puerto Rico from 2012 to 2022 (in U.S. dollars) CharacteristicIncome per capita in U.S. dollars202224,560202122,460202021,200201922,0407 more rows ?