What gets deducted from your paycheck in Puerto Rico 2026

The five deductions that come out of your wages

By law, up to five deductions come out of an employee's paycheck in Puerto Rico: **Puerto Rico income tax withholding**, **6.2% for Social Security**, **1.45% for Medicare**, **0.5% for SINOT** (capped at $9,000 of annual wages) and, if driving is part of your job, the **$0.50 weekly Chauffeur's Social Security**. Anything else you see (health plan, credit union, a loan, AEELA, retirement) is voluntary or comes from your particular job, not from a law that applies to everyone.

The last two are what confuse anyone who moved from the mainland or compares their stub with a cousin's in Florida: **SINOT and chauffeur insurance do not exist there**. They are creatures of Puerto Rico law, and they explain why two people with the same gross pay (one here, one in Orlando) take home different amounts.

There is an absence that surprises people just as much: a private-sector or Puerto Rico government employee's check shows **no federal income tax withholding**. Social Security and Medicare do show up, but those are a separate thing. Below is why, and the one exception.

Treasury withholding: it is not a flat percentage

Section 1062.01 of the Puerto Rico Internal Revenue Code of 2011 requires every employer to deduct and withhold income tax from the wages it pays, following the tables approved by the Secretary of the Treasury. The tables in force are those applicable to wages paid **after December 31, 2016**, the manual has not been replaced since.

Your employer does not apply a percentage to your gross. It first subtracts the **withholding exemption**, which has four pieces: your personal exemption, the additional personal exemption for veterans if it applies, the exemption for each dependent, and the **allowance based on deductions**, which is optional. The percentage from the table applies to what is left, the 'amount of wages' subject to withholding.

You declare those pieces on **Form 499 R-4.1, Withholding Exemption Certificate**. That is where how much they withhold gets decided. The allowance based on deductions works like this: add up the deductions you will claim (mortgage interest, for instance) and **divide by $500**; each $500 is one allowance, and a fraction above 50% counts as one more.

Treasury's own manual includes a worked example worth more than any explanation. A single taxpayer earning **$2,200** a month who declared $4,500 in mortgage interest: the monthly personal exemption is **$292**, the allowances based on deductions are 9 ($4,500 ÷ 500) at $41.50 each, or **$373.50**. Total exemption: **$665.50**. Wages subject to withholding: **$1,534.50**. Apply **7%** and subtract the table's $52.50 adjustment. Withholding for the month: **$54.91**.

Two practical consequences. First: if you never filled out the 499 R-4.1, or filled it out blank, your employer withholds without considering dependents or deductions, and over-withholds all year only to refund it later. Second: if you married, had a child, bought a house, or your spouse stopped working, that form is now out of date, and nobody is going to remind you.

One special case almost nobody knows: if you claim the protections of **MSRRA** (the federal residency law for military spouses), your employer does **not** withhold for Puerto Rico purposes, though you could still be subject to federal withholding as the IRS provides.

Social Security and Medicare: identical to the states

These two are federal and in Puerto Rico they are paid exactly as in any state. **Social Security takes 6.2%** from you and your employer contributes another 6.2%, for 12.4% total. **Medicare takes 1.45%** from you and another 1.45% from the employer, for 2.9%.

The difference between them is the ceiling. Social Security has a **maximum wage base: for earnings in 2026 it is $184,500**. Past that point in the year, the Social Security line goes dark on your stub and that paycheck's net goes up. **Medicare has no ceiling**: it applies to all covered wages, without limit.

And there is a third layer that surprises first-time earners at that level: the **Additional Medicare Tax of 0.9%** on wages exceeding **$200,000** in a calendar year. The employer must begin withholding it in the pay period in which it pays you above that $200,000 and continue through year end, without regard to your filing status. There is no employer match for this one: it is yours alone.

The two deductions that exist only here

**SINOT.** Section 8 of Act 139 of 1968 (11 L.P.R.A. § 208) provides that each worker in insured employment contributes **half of 1% (0.5%) of their wages**, disregarding wages above **$9,000 in any calendar year**. In plain terms: the most SINOT can take from you in a year is **$45**. The employer contributes another 0.5% on the same base, and the statute expressly forbids it from deducting its half from you.

That deduction of pennies is what entitles you to temporary non-occupational disability insurance, the one that pays you when you get sick or hurt away from work. If your employer established a **private plan authorized** by the Secretary, neither it nor you pay the contributions under this section: the private plan replaces the government's.

**Chauffeur's Social Security.** Article 12 of Act 428 of 1950 (29 L.P.R.A. § 690) sets the insured person's contribution at **fifty cents ($0.50) for each week or fraction of a week worked**, which the employer withholds from your wages and remits. The employer also pays **thirty cents ($0.30)** a week for each covered employee. Someone self-employed as their own employer pays **eighty cents ($0.80)** a week.

Here is the part almost nobody knows, and why so many people see the line and do not recognize it: **you do not have to be a professional driver**. Article 1 defines 'chauffeur' to include a person employed by another (a private company, a municipal or Commonwealth government, its agencies, public corporations or authorities) **in any occupation in which the employer requires or permits them to operate a motor vehicle as an integral part of the job, usually and regularly and not casually or sporadically**, holding a driver's, chauffeur's or heavy-vehicle license. The technician who drives to service calls, the social worker visiting cases, the municipal employee who moves the van: all of them are in.

The same statute says who is **out**: administrators, executives and professionals as defined by Puerto Rico's Minimum Wage Board; federal government employees; and any insured person who already received the bonus under Article 6 of that law.

What does NOT come out of your wages (though it costs money)

There are protections people believe they are paying for and are not. Worth knowing, because if they show up as deductions on your stub, there is something to ask about.

**The State Insurance Fund.** Act 45 of 1935 places on the employer (not on you) the duty to insure its workers with the State Insurance Fund Corporation for injury, illness or death, and to post the printed notice proving it. Premiums are computed on the payroll the employer reports. You do not contribute to the Fund: that coverage is on the employer.

**Federal unemployment tax (FUTA).** The IRS describes it as a tax on the employer on the wages it pays: **6.0% on the first $7,000** paid to each employee in the year, with a credit of up to 5.4% if state unemployment contributions were paid on time, leaving an effective rate of **0.6%**. It is reported on Form 940, which is the employer's return.

**Puerto Rico's unemployment insurance.** The employer pays this one too. Act 74 of 1956 requires each employer to contribute to the Unemployment Fund on the **first $7,000** of wages paid to each employee per calendar year, on an experience-rating basis since January 1, 1992. And its Section 9 is blunt: **no employer shall make, require or accept, directly or indirectly, deductions from wages to fund the contributions it is obligated to make**. More: any agreement by which an employee undertakes to pay all or part of those contributions is **void**, and the employer may not discriminate against someone who claims benefits.

Why your check has no federal income tax withholding

Wages for services performed **in** Puerto Rico are **Puerto Rico source** income, and IRS Publication 570 says so whether the employer is private or public. For a bona fide resident of Puerto Rico whose income all comes from island sources, the IRS puts it in one sentence: **you are not required to file a U.S. tax return**. Hence your employer withholds for Treasury and not for the IRS.

Do not confuse two different things. This is **income** tax. Social Security and Medicare are **payroll** taxes and are paid here exactly as in any state, as you saw above. Not filing a federal return does not mean being outside the federal system.

The exception is wages paid by the **U.S. Government** or its agencies for working in Puerto Rico. Publication 570 says those wages are Puerto Rico source income (and therefore taxed here) but do **not qualify for the exclusion** on the federal return, so they are taxed there too, with a foreign tax credit to avoid double taxation. If you work for a federal agency on the island, your stub and your filing season look nothing like your neighbor's.

How to check that your deduction adds up

Take your stub and run these numbers. They take five minutes and they are what catches payroll errors.

If something does not add up, the first step is to ask payroll for the breakdown in writing and compare it against your filed Form 499 R-4.1. The most common errors we see are not fraud, they are stale forms: dependents who no longer qualify, or deductions declared once and never updated.

And if your employer simply does not hand you a stub, that is a separate violation with its own complaint route.

• **Social Security:** period gross × 0.062. If you already passed $184,500 year to date, it should be $0.
• **Medicare:** period gross × 0.0145, no cap. Above $200,000 year to date, add 0.9% on the excess.
• **SINOT:** gross × 0.005, until your wages for the year reach $9,000. After that, $0. It should never exceed $45 in a year.
• **Chauffeur:** $0.50 per week or fraction. On a biweekly check, $1.00. If you never drive as part of your job, it should not appear at all.
• **Treasury:** compare against your 499 R-4.1. If you claimed a personal exemption and allowances, the withholding must be lower than with a blank form.