Taxes in El Salvador for Expats 2026 — What You Owe and What Stays Untaxed

Taxes in El Salvador for expats are territorial, meaning the country taxes Salvadoran-source income and leaves foreign income alone. A reform in March 2024 made money received from abroad outside the tax base for residents and non-residents. Foreign pensions are usually untaxed in El Salvador. The country uses the US dollar for taxes, payroll, and property charges, eliminating conversion risk.

Expats become tax domiciled after 200 consecutive days in El Salvador during a calendar year or if it is the main source of their income. Taxes depend less on residence status than expected because the tax base is territorial. A resident with only foreign income still owes little in taxes.

Eligible income up to US$6,600 a year is exempt from taxes for domiciled individuals, with progressive rates starting at 10% for income up to US$9,142.86, 20% for income up to US$22,857.14, and 30% above that. Non-domiciled individuals face a flat 30% tax rate.

Capital gains are taxed at a flat 10%, and foreign-purchased assets sold within twelve months are taxed as ordinary income. A 13% value-added tax (IVA) applies to most household spending, built into prices rather than added at the counter.

Employees also face payroll taxes: 3% to the health system (ISSS) up to US$30 monthly, and 7.5% to Social Security (SPP), capped at US$75 per month. There are no real estate or wealth taxes, but municipalities levy their own charges. Rent from a Salvadoran property is taxable income.

The Bitcoin Law reform in 2025 made accepting Bitcoin voluntary and stopped the government from accepting it, settling income tax obligations in US dollars.