🇵🇦 Panama
Net salary in Panama: income tax and CSS
Panama: 3 income tax brackets from 0% to 25% in 2026. The EXPATRIATION.IO calculator turns gross salary into net take-home pay using the official scale and employee social contributions.
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Tax breakdown by bracket
| Bracket | Rate | Amount | Tax |
|---|---|---|---|
| $0 – $11,000 | 0.0% | $11,000 | $0 |
| Income tax | $0 | ||
Social contributions breakdown
Employer contributions
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Computed for your profile: 9,790 $ net in Panama.
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🇵🇦 Panama
Panama taxes employment income on three bands of article 700 of the Fiscal Code, in the wording given by article 10 of law 8 of 15 March 2010: nothing up to 11,000 balboas a year, 15% on the part between 11,000 and 50,000, then a fixed 5,850 on the first 50,000 plus 25% above. Salaries are denominated in balboas, which the law holds at a fixed parity with the United States dollar, so the figures read the same in either unit. The base is gross pay less only the personal deductions of article 709, which the employer applies under article 704: the social security contributions are not deducted from it, the education levy having lost its deductibility when article 24 of the 2010 law repealed the relevant paragraph. The employee contributes 9.75% to the Caja de Seguro Social under article 101 of law 51 of 2005, as rewritten by article 84 of law 462 of 18 March 2025, and 1.25% of basic pay to the seguro educativo under law 13 of 1987, which is 11% of pay in all. That 2025 reform left the employee rate untouched and staged the employer one instead, from 13.25% today to 14.25% on 1 March 2027 and 15.25% on 1 March 2029, on top of the employer’s 1.50% education levy. A thirteenth payment, the decimotercer mes of cabinet decree 221 of 1971, is compulsory in three instalments and is earned at one day of pay for every eleven days worked; it carries income tax and a special contribution of its own, 7.25% for the employee and 10.75% for the employer, rather than the ordinary rates.
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What the calculation reproduces, what it does not model
The calculation models the twelve ordinary monthly salaries of an employee, on pay denominated in balboas at their fixed parity with the United States dollar. It does NOT include the decimotercer mes, the thirteenth payment that cabinet decree 221 of 18 November 1971 makes compulsory in three instalments of one third each and that its article 2 earns at one day of pay for every eleven days, or fraction thereof, of effective work, continuous or not, days off for duly evidenced illness, work accident, maternity, licence and holidays counting as worked. That payment is not neutral in either direction: it carries income tax, the Dirección General de Ingresos placing it in column 16 of the Informe 03, which enters the taxable income of its point 25; and it carries a special contribution of its own under article 101 numerals 4 and 5 of law 51 of 2005 as rewritten in 2025, 7.25% for the employee and 10.75% for the employer, instead of the ordinary 9.75% and 13.25%. No field of this engine can express a year whose thirteenth payment is taxed in full but contributed at a different rate on each side, so the calculation stays on the twelve ordinary salaries rather than overstate the contribution. The joint deduction of 800 balboas that article 709 grants to spouses filing together is not applied either, the engine having no deduction conditioned on a married household that would not also add an inert dependants control, Panama having had no per-dependant deduction since article 24 of law 8 of 2010 repealed it; it is worth 120 balboas of tax a year in the 15% band and 200 in the 25% one. Not modelled: the other personal deductions of article 709, namely mortgage interest up to 15,000 a year, interest on education loans, medical insurance premiums and medical expenses, and contributions to a pension fund capped at 10% of annual gross income, all of which require certificates the employee files with the employer; the separate 10% and 15% withholding that article 701 applies to representation expenses, which are not added to salary; and the occupational risk premium the employer pays, which varies by activity and is therefore absent from the employer cost line. Neither contribution text sets a ceiling on the pay they are charged on. The model is a resident: article 700 addresses individuals without a residence test, and no distinct rate for a non-resident employee working in Panama was found in the Fiscal Code, so none is applied rather than guessed.
Tax system in Panama
Panama charges employment income on three bands of article 700 of the Fiscal Code: nothing up to 11,000 balboas a year, 15% on the part between 11,000 and 50,000, then a fixed 5,850 on the first 50,000 plus 25% above. Salaries are denominated in balboas, held at a fixed parity with the United States dollar, so the figures read the same in either unit. The base is gross pay less only the personal deductions of article 709: contributions are not taken off it, and the education levy stopped being deductible in 2010. The employee withholds 11% of pay, 9.75% to the Caja de Seguro Social and 1.25% to the seguro educativo. The social security reform of 18 March 2025 left that employee rate untouched: it staged the employer one instead, from 13.25% today to 15.25% in 2029. The decimotercer mes, paid in three instalments, carries income tax and a special contribution of its own at 7.25%. On the median salary of employees working 35 hours a week or more, 789 balboas a month, no tax is due and a single person keeps 702 B/. net a month; on 2,000 balboas, 1,618 B/.
Income tax scale 2026
| Taxable income | Rate |
|---|---|
| $0 – $11,000 | 0% |
| $11,000 – $50,000 | 15% |
| $50,000 and above | 25% |
Employee social contributions
| Contribution | Rate | Annual cap |
|---|---|---|
| Social security CSS (9.75%) | 9.75% | No cap |
| Education levy (1.25%) | 1.25% | No cap |
Gross to net for common salaries (2026)
Single filer without children, standard scale and employee contributions. Estimates for planning, identical to the calculator above.
| Gross per month (over 12) | Gross per year | Net per year | Net per month (over 12) | Employer cost per year | Total deductions |
|---|---|---|---|---|---|
| $750 | $9,000 | $8,010 | $668 | $10,328 | 11% |
| $1,000 | $12,000 | $10,530 | $878 | $13,770 | 12.3% |
| $1,500 | $18,000 | $14,970 | $1,248 | $20,655 | 16.8% |
| $2,000 | $24,000 | $19,410 | $1,618 | $27,540 | 19.1% |
| $3,000 | $36,000 | $28,290 | $2,358 | $41,310 | 21.4% |
| $4,167 | $50,000 | $38,650 | $3,221 | $57,375 | 22.7% |
| $6,250 | $75,000 | $54,650 | $4,554 | $86,063 | 27.1% |
| $10,000 | $120,000 | $83,450 | $6,954 | $137,700 | 30.5% |
| $15,000 | $180,000 | $121,850 | $10,154 | $206,550 | 32.3% |
Wage benchmarks in Panama
Median: the Instituto Nacional de Estadistica y Censo of the Contraloria General de la Republica, Labour Market Survey of September 2025, table 25. The figure is the median monthly salary of employees aged 15 and over who worked 35 hours a week or more, 87.1% of the 1,210,496 employees counted; the median across all employees, part-time included, is 755.8 balboas. Salaries are denominated in balboas at their fixed parity with the United States dollar, which is why the currency code reads USD here. Minimum wage: no line. Panama has no single national minimum: the figure is set by executive decree across a grid of regions, economic activities and company sizes, and that decree was not read for this page, so nothing is shown rather than a figure picked out of the grid. Average: no line, the survey publishing medians rather than a mean.
| Benchmark | Gross amount | Source |
|---|---|---|
| Median wage (2025) | 789 USD gross per month (employees working 35 hours a week or more) | INEC, Encuesta de Mercado Laboral, septiembre 2025 |
Three bands, and a base that does not deduct contributions
Article 700 of the Fiscal Code, in the wording given to it by article 10 of law 8 of 15 March 2010, holds the whole individual scale in three lines: nothing up to 11,000 balboas a year, 15% on the part between 11,000 and 50,000, then a fixed 5,850 on the first 50,000 plus 25% above. The fixed amount is exactly 15% of the second band, so the scale is marginal to the cent and this calculator reproduces it without any rounding gap.
The base is unusual in one respect. Article 704 has the employer compute and withhold the tax "previa la deduccion prevista en el articulo 709", and article 709 lists personal deductions only: 800 balboas for spouses filing jointly, mortgage interest up to 15,000 a year, interest on education loans, medical insurance premiums and medical expenses, and pension fund contributions up to 10% of annual gross. Social security is not on that list, and the education levy left it when article 24 of the 2010 law repealed the paragraph that carried it.
The tax authority publishes the arithmetic itself. Point 25 of the instructions to the Informe 03, the annual salary report employers file, defines taxable income as the sum of the remuneration columns less the single deductions column, and no contribution line appears among the subtractions. Salaries are denominated in balboas, which the law holds at a fixed parity with the United States dollar, so every figure on this page reads the same in either unit.
Sources: Ley 8 de 15 de marzo de 2010, arts. 10, 17, 24 y 25 · Instructivo Informe 03, Direccion General de Ingresos · INEC, Encuesta de Mercado Laboral, septiembre 2025
CSS and seguro educativo: 11% withheld, and a reform that touched only the employer
Two lines come off a Panamanian payslip. Article 101 of law 51 of 2005 sets the social security contribution at 9.75% of salaries for the employee, and the seguro educativo adds 1.25% of basic pay under article 1 of cabinet decree 168 of 1971 as replaced by law 13 of 28 July 1987. Neither text sets a ceiling on the pay it is charged on.
Law 462 of 18 March 2025 rewrote that article 101 in a reform of 244 articles, and the consolidated text it produced renumbers it as article 96. The employee rate stayed at 9.75%. What the reform staged is the employer contribution, 13.25% of salaries paid from its entry into force to 28 February 2027, 14.25% from 1 March 2027 to 28 February 2029 and 15.25% from 1 March 2029, on top of the employer’s own 1.50% education levy.
The employer also owes an occupational risk premium, which varies by activity and by firm and is therefore not included in the employer cost shown here.
Sources: Ley 462 de 18 de marzo de 2025, art. 84 · Ley 13 de 28 de julio de 1987, art. 1 · Texto Unico de la Ley 51 de 2005, art. 96
The decimotercer mes: taxed in full, contributed at a rate of its own
Cabinet decree 221 of 18 November 1971 created the decimotercer mes and earns it at one day of pay for every eleven days, or fraction thereof, of effective work, continuous or not, days off for occupational and non-occupational illness, work accident, maternity, licence and holidays counting as worked where duly evidenced. It is paid in three instalments of a third each.
Its treatment is what makes it hard to model. It is taxed: the tax authority places it in column 16 of the Informe 03, which enters the taxable income of point 25, and the 1971 decree already reserved income tax from the exemption it granted. And it is contributed, but not at the ordinary rate: numerals 4 and 5 of article 101 of law 51 of 2005, already in its original 2005 wording and carried over word for word by the 2025 reform, set a special contribution on each of the three instalments, 7.25% for the employee and 10.75% for the employer, where ordinary pay carries 9.75% and 13.25%.
No field of this engine can express a year whose thirteenth payment is taxed in full while each side contributes at a different reduced rate, so the calculation stays on the twelve ordinary salaries rather than overstate the contribution. A Panamanian annual package is therefore larger than the figures above by roughly a month of gross, and that extra month carries income tax and a contribution of 7.25%.
Sources: Decreto de Gabinete 221 de 18 de noviembre de 1971 · Ley 462 de 2025, art. 84 (numerales 4 y 5) · Ley 51 de 27 de diciembre de 2005, art. 101 (numerales 4 y 5) · Instructivo Informe 03, punto 16 y punto 25
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Source: dgi.mef.gob.pa (Instructivo Informe 03) et Gaceta Oficial 26489-A · Tax year 2026 · Last updated September 2026