Does Puerto Rico pay federal taxes to the U.S?
‘Contrary to common misconception, residents of Puerto Rico pay U.S. federal taxes: import/export taxes, federal commodity taxes, social security taxes, etc. Most residents do not pay federal income tax but pay federal payroll taxes (Social Security and Medicare), and Puerto Rico income taxes. But federal employees, or those who do business with the federal government, Puerto Rico-based corporations that intend to send funds to the U.S. and others also pay federal income taxes. Because the cutoff point for income taxation is lower than that of the U.S. IRS code, and because the per-capita income in Puerto Rico is much lower than the average per-capita income on the mainland, more Puerto Rico residents pay income taxes to the local taxation authority than if the IRS code were applied to the island. Residents are eligible for Social Security benefits upon retirement.
