Retirement Retirement Planning

7 Tempting Tax Benefits of Retiring in Panama

If you're hoping to retire outside of the country, there are plenty of financial reasons to make Panama a top option.

skyline of panama city, panama
Updated April 5, 2025
Fact checked

When you are planning for retirement, it's important to calculate how much money you'll need to withdraw from retirement savings accounts each year.

Factors such as inflation and a high cost of living can make saving enough to retire stateside feel like an impossible dream. That is why some retirees move to nearby affordable countries that offer tax perks to American expatriates.

Panama is an example of such a country. If you love the idea of seaside life in a low-cost area, here are seven tax incentives that could make Panama a logical place to spend retirement.

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Panama has low property taxes on primary residences

Andrey Popov/Adobe House Property Tax Bill

Panama's property taxes on primary residences are low. In some circumstances, homes costing $120,000 or less aren't subject to property taxes at all.

In other cases, you'll pay taxes ranging from 0.5% to 0.7% of the property's value.

You also might get a tax break on a secondary home

RomanR/Adobe realtor holding house keys

If you're hoping to purchase a second property in Panama — such as a smaller vacation home — you won't have to pay property tax if the secondary property costs $30,000 or less.

Otherwise, you can expect to pay between 0.6% and 0.8% of the property's total value in property taxes.

Paying property taxes early also can reduce your costs

chinnarach/Adobe hand swipe on calendar page

In Panama, you can lower your bill by paying taxes early.

You can qualify for a property tax discount of 10% if you visit the General Revenue Directorate taxpayer's office in the nation's capital of Panama City to fill out tax paperwork early.

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Panama doesn't tax foreign-sourced income

Pormezz/Adobe Businessman calculating business balance Tax deduction concept

While American expatriates still need to pay taxes to the U.S. government on Social Security retirement income and other U.S.-based sources of revenue, those living in Panama won't need to pay additional taxes to the local government.

In Panama, there is no tax on foreign-sourced income.

You may qualify for a tax exemption for imported household goods

JU.STOCKER/Adobe father carrying boxes into new home

When you relocate to some places, you might have to pay a tax on household goods you import from your home country to the new country of residence. But in Panama, you're allowed to import up to $10,000 worth of household goods without paying a tax as long as you have a Panamanian visa.

When importing goods over $10,000, you can be subject to a tax of 22%.

You might qualify for other price breaks

lordn/Adobe cheerful hotel receptionist greeting senior couple

Panama does its best to make moving to the country appealing to American retirees on tight budgets. As a result, the government offers a series of other cost-cutting discounts to American expats.

These include 25% off utility costs, 30% to 50% off hotel rates, 10% off medications, and 50% off sports events, cultural events, and movie theaters.

The overall cost of living is low

luciano/Adobe senior woman with shopping bags

Many Americans hope to retire to a sunny, beachside town. However, coastal real estate in places such as California or Florida comes with a notoriously high cost of living.

The same can't be said of Panama, where the cost of living is 36.5% less than the cost of living in Miami, according to online database Numbeo. Groceries in the country's capital city are 28.3% cheaper than those in Miami, and rent costs an average of 54.8% less in Panama City compared to Miami.

Is Panama a good place to retire?

Daniel Rodriguez/Adobe retired lovers enjoying retirement on the beach

If you love the beach and want to make your dollar stretch as far as possible, Panama could be the perfect retirement spot.

In fact, Panama is the best retirement location for Americans looking to live internationally after leaving the workforce, according to International Living's 2025 Annual Global Retirement Index.

On top of its financial incentives, Panama's social climate could be appealing to expats worried about making friends later in life. Thanks to its acceptance of international retirees, Panama has a healthy expatriate community in Panama City and beyond.

While the Central American country is known for its tropical climate, it's also home to mountains where the temperatures trend cooler and the views are spectacular.

Bottom line

2B/Adobe elderly couple at tropical resort

If a tropical retirement on the coast sounds like the ideal place for you, you don't have to penny-pinch in Miami or San Diego. Instead, you could find that the most stress-free retirement is one spent in an expat-friendly country such as Panama.

Before you move, consult with a tax advisor or financial planner. They can help you figure out whether moving out of the country makes the most sense for your bottom line.

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