Paraguay · Taxes
Paraguay taxes for US citizens
Source-checked25 sources, 25 officialHow we checkIn brief
Paraguay taxes income from Paraguayan sources. A retiree living on US pensions and interest owes no Paraguayan income tax, however long they stay.
In short: what you'd pay in Paraguay
Retiree on US income
US pensions, Social Security and interest don't become Paraguayan income because you live here. No social security is due either.
Ballpark: $0 a year at 90, 182 or 365 days
Remote worker paid from the US
Not settled yet: how tax and social security are paid when a US employer has no presence here. Still being checked
Working for a local employer
In your first year as a temporary resident, about 10.5% of pay for work in Paraguay, plus 9% social security.
Ballpark: On $60,000 a year: about $6,300 income tax plus $5,400 social security
Not yet verifiedThe retiree and payroll results, worked out from the official tax rules.
Still being checkedTax and social security when you work remotely for a US employer.
How Paraguayan tax works
- Tax residence follows permanent residence: not a day count. Temporary residents are taxed as non-residents.
- What's taxed: income from Paraguayan sources, such as work done here. Non-residents pay about 10.5% of gross pay.
- Social security: local employees pay 9% to the national system (IPS).
- Your US return: you still file every year. Paraguayan tax may be credited against US tax; see a tax adviser.
- No Social Security agreement: the US and Paraguay have none, so US payroll tax continues.
Checked against the lawTax residence tied to permanent residence.
Not yet verifiedThe non-resident rate and the social security rate.
Sources (8)
Links
- Law 6380: income-tax source and non-resident rates
- Decree 3181: non-resident tax residence rules
- DNIT: non-resident tax guide
- DNIT: personal-services tax guide
- IPS 2026 actuarial study: contribution rates
- SSA: international Social Security agreements
- IRS: US citizens and resident aliens abroad
- IRS: foreign tax credit, how to figure the credit
Nine worked examples, 2026
The retiree has $30,000 of Social Security, a $40,000 private pension and $20,000 of interest. The employee works for a US company with a registered Paraguay branch paying local payroll.
| Who | Days in Paraguay | Paraguay income tax | US income tax, before credits |
|---|---|---|---|
| Local payroll employee, $60,000 | 90 | $1,553 | $5,020 |
| Local payroll employee, $60,000 | 182 | $3,141 | $5,020 |
| Local payroll employee, $60,000 | 365 | $6,300 | $5,020 |
| Local payroll employee, $150,000 | 90 | Not settled | $24,734 |
| Local payroll employee, $150,000 | 182 | Not settled | $24,734 |
| Local payroll employee, $150,000 | 365 | $15,750 | $24,734 |
| Retiree, $90,000 | 90 | $0 | $8,348 |
| Retiree, $90,000 | 182 | $0 | $8,348 |
| Retiree, $90,000 | 365 | $0 | $8,348 |
Don't add the two columns: credits and the foreign earned income exclusion can cut the US part.
Needs reviewThe $150,000 employee at 90 and 182 days.
Sources (13)
Legal basis and exact figures
- Retiree: Paraguay's IRP and INR source provisions don't make these US receipts Paraguayan-source just because their owner lives there (Law 6380 arts 47–49, 71–73; Decree 3181 annex 2). No insured work or IPS benefit relationship and no voluntary membership, so no compulsory IPS (Law 3990); this doesn't establish free healthcare or the cost of voluntary cover. Passive amounts are annual, not prorated.
- Employees: first-year temporary admission throughout, so INR, not IRP: local personal services on a 70% deemed base at 15% = 10.5% of gross on days worked in Paraguay. Registered US-company branch as INR collection agent (Decree 6515/2021), correct withholding, compulsory IPS at 9% of the ordinary wage: $1,331.51 (90 days), $2,692.60 (182), $5,400 (365) on $60,000; $13,500 on $150,000 at 365. Excludes the aguinaldo and other arrangements. A permanent-admission resident would use the IRP 8/9/10% net model instead.
- $150,000 at 90 and 182 days: not final. IPS alone doesn't reach the US credit ceiling there, so the result depends on whether INR is US-creditable (sensitivity bounds only). An unregistered US-only employer is a separate unresolved case.
- US side: US figures are federal income tax before the exclusion and credits; employee FICA is extra ($4,590 on $60,000; $11,475 on $150,000). The 9% IPS levy is treated as US-creditable by reasoned application of 26 CFR 1.901-2; no IRS ruling names it. No in-force US totalization agreement with Paraguay. No totals.
Links
- Law 6380: income-tax source and non-resident rates
- Decree 3181: non-resident tax residence rules
- DNIT: non-resident tax guide
- DNIT: personal-services tax guide
- Decree 6515/2021: non-resident withholding agents
- IPS 2026 actuarial study: contribution rates
- Law 3990/2010: people covered by IPS
- SSA: international Social Security agreements
- IRS: 2026 inflation adjustments
- IRS: US citizens and resident aliens abroad
- IRS: foreign earned income exclusion
- IRS: foreign tax credit, how to figure the credit
- IRS: FICA tax rates (Topic 751)
Other Paraguay guides
Every rule with its legal source.
Free shortlist
Your top 3 countries, picked for you
Tell us who's moving and we'll show the three Latin American countries that fit people like you best, ranked on what matters most to you, with the trade-off to know about each.