As Puerto Rico prepares to adopt a new Individual Resident Investors’ program under amended Act 60-2019, existing decree holders will be grandfathered in while prospective applicants are rushing to beat the December 31, 2026 deadline. According to McConnell Valdés Tax Practice chair and capital member Isis Carballo-Irigoyen demand is already surging.

Investors interested in relocating to Puerto Rico under the island’s Individual Resident Investor program (formerly Act 22) have until December 31, 2026, to file an application and qualify for the current 0% tax rate on certain passive income. On March 20, 2026, Gov. Jenniffer González signed Act 38-2026, which extended the program by 20 years but established a new tax framework for applications filed beginning January 1, 2027.

Under the revised provisions, new decree holders will be subject to a 4% tax rate on interest, dividends, and capital gains, provided the income is realized after establishing bona fide residency in Puerto Rico. Applications submitted by December 31, 2026, and approved at a later date will remain eligible for the existing 0% rate on those income categories.

Other adjustments taking effect in January include a requirement that resident investor decrees be held by individuals or through trusts, rather than corporations. The exemption applicable to the sale of a primary residence will also change. Nevertheless, “despite these adjustments, prospective clients still find the program attractive,” said Carballo-Irigoyen.

According to the tax expert, the current surge in applications is comparable to the one experienced in 2020 and 2021, when digital nomads and remote workers realized they could continue doing their jobs while enjoying the perks of an island lifestyle. She also said that, while applications continue to pour in from U.S. states such as New York, California, Nevada, and Massachusetts, she has noticed growing interest from Latin America and Europe.

Act 60 attracts an impressive range of professionals, from mass tort lawyers to physicians, and continues to draw high-net-worth individuals who contribute to the local economy through the lodging and maintenance of airplanes and yachts, purchases of multiple homes, and employment of staff, said Carballo-Irigoyen. “I began as a skeptic of the program, but have since become a firm believer in it,” she added.

She also addressed persistent misconceptions about the program, including the belief that renting a home in Puerto Rico and visiting infrequently is enough to comply with the law’s provisions. Rather, an individual resident investor must become a bona fide Puerto Rico resident, which means owning property on the island, spending at least 186 days a year in the U.S. territory, and performing their work from Puerto Rico.

To those attempting to circumvent these requirements, Carballo-Irigoyen offered a warning: “If the IRS audits you, you will have to convince them that you are truly meeting the law’s requirements. The law is clear and it was not designed to promote this lifestyle.”

She also advised prospective applicants to seek the counsel of a tax advisor to ensure the program is the right fit, since holding a decree in Puerto Rico does not exempt a Puerto Rico individual resident investor from complying with federal tax obligations. In the case of McConnell Valdés, the firm regularly refers clients to specialized firms in the mainland to complement the advisory services it offers to Act 60 clients.

Advising Act 60 clients now accounts for 20% of the firm’s tax practice, and the firm has hired additional staff to manage the surge.

Carballo-Irigoyen believes that other jurisdictions, such as the USVI, appear to be losing their appeal among these types of investors while Puerto Rico offers an attractive combination of tax savings, a multicultural environment, and an island lifestyle that includes excellent private schools.

Concerns remain among decree holders and applicants about sustained resentment among some locals and the state of medical services, although some specialized concierge services have begun springing up to address that need.

“I’m curious to see what will happen after January 1, 2027,” she said.