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Payroll taxes in Chile: employee income tax withholding, the rising employer pension contribution, unemployment and work accident insurance, and the training credit

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Last verified: 2026-10-26 · Status: Changing

Employers withhold the monthly second category tax from salaries on a progressive scale from 0 to 40 percent in UTM brackets, and pay it with other withholdings by the 12th. On top of pay they fund unemployment insurance (2.4 percent, or 3 percent for fixed term contracts), work accident insurance (0.90 percent plus up to 3.4 percent by risk) and, since August 2025, a new employer pension contribution that is 3.5 percent from August 2026 and rises to 8.5 percent by 2033. Employees contribute 10 percent to their pension account and 0.6 percent to unemployment insurance, on pay capped at 90 UF (135.2 UF for unemployment insurance) in 2026.

USD figures use the Central Bank exchange rate of CLP 986.58 per US dollar published in the Diario Oficial of 23 October 2026 (Ley Nº 18.840 art. 44). Tax units use the SII values of UTM CLP 72,151 and UTA CLP 865,812 for October 2026 and UF CLP 41,221.08 for 26 October 2026. Conversions are for orientation only.

Key facts

Top rate of monthly second category tax on salaries	40 %DL Nº 824, art. 43 Nº 1, as of 2026-10-26 · in force
Monthly salary band exempt from second category tax	13.5 UTMDL Nº 824, art. 43 Nº 1, as of 2026-10-26 · in force
Employer pension contribution from August 2026	3.5 %Ley Nº 21.735, fourth transitory article letter b), as of 2026-10-26 · in force
Employer pension contribution from August 2027	4.25 %Ley Nº 21.735, fourth transitory article letter c), as of 2026-10-26 · pending
Employer pension contribution target (from August 2033)	8.5 %Ley Nº 21.735, art. 1 and fourth transitory article letter i), as of 2026-10-26 · pending
Employer unemployment insurance, indefinite contracts	2.4 %Ley Nº 19.728, art. 5, as of 2026-10-26 · in force
Employer unemployment insurance, fixed term contracts	3 %Ley Nº 19.728, art. 5, as of 2026-10-26 · in force
Employer basic work accident contribution	0.9 %Ley Nº 16.744, art. 15, as of 2026-10-26 · in force
Maximum additional work accident contribution by risk	3.4 %Ley Nº 16.744, art. 15, as of 2026-10-26 · in force
Employee pension contribution	10 %DL Nº 3.500, art. 17, as of 2026-10-26 · in force
Monthly taxable pay cap for pension contributions, 2026	90.0 UFDL Nº 3.500, art. 16; Superintendencia de Pensiones, as of 2026-10-26 · in force
Monthly taxable pay cap for unemployment insurance, 2026	135.2 UFLey Nº 19.728; Superintendencia de Pensiones, as of 2026-10-26 · in force
Training tax credit ceiling, share of annual taxable payroll	0.7 %Ley Nº 19.518 art. 36, as amended by Ley Nº 21.850 art. 29, as of 2026-10-26 · in force

The rule

1. Monthly salaries bear the second category single tax on the following scale in UTM: exempt up to 13.5 UTM; 4 percent on the part from 13.5 to 30; 8 percent from 30 to 50; 13.5 percent from 50 to 70; 23 percent from 70 to 90; 30.4 percent from 90 to 120; 35 percent from 120 to 310; and 40 percent above 310 UTM. The employer withholds it and declares and pays it by the 12th of the following month.
Cost to do it: Borne by the employee through withholding; employer cost is payroll administration.
Example: On monthly taxable pay of CLP 3,000,000, with the October 2026 UTM of CLP 72,151, the withholding is CLP 114,457. / On about US$3,040.81, about US$116.01 a month.Decreto Ley Nº 824, Art. 43 Nº 1, art. 74 Nº 1 and art. 79, 1974-12-31 official text · verified 2026-10-26

2. Employers pay a new pension contribution that will reach 8.5 percent of taxable pay, phased in from the first day of the fifth month after publication of Ley Nº 21.735 (26 March 2025): 1 percent from August 2025, 3.5 percent from August 2026, 4.25 percent from August 2027, 5 percent from August 2028, then 5.7, 6.4, 7.1, 7.8 and 8.5 percent at twelve month intervals. The steps from 5.7 percent onward are lower if the external evaluation of Ley Nº 21.713 shows lower than expected revenue not otherwise compensated. The contribution uses the same pay cap as the pension system and is deductible for the employer.
Cost to do it: 3.5 percent of capped pay from August 2026: CLP 70,000 a month on a CLP 2,000,000 salary.
Example: CLP 70,000 a month on CLP 2,000,000, rising to CLP 170,000 at 8.5 percent. / US$70.95 a month on US$2,027.21, rising to US$172.31.Ley Nº 21.735, Art. 1, art. 2, art. 3 and fourth transitory article, 2025-03-26 official text · verified 2026-10-26 · changed: The rate rose from 1 percent to 3.5 percent in August 2026 (seventeenth month after publication of Ley Nº 21.735) and rises to 4.25 percent in August 2027.

3. Unemployment insurance is funded by 0.6 percent of taxable pay paid by workers on indefinite contracts and, from the employer, 2.4 percent for indefinite contracts or 3 percent for fixed term or per project contracts.
Cost to do it: Employer CLP 48,000 a month on a CLP 2,000,000 salary under an indefinite contract, CLP 60,000 on a fixed term one.Ley Nº 19.728, as amended by Ley Nº 20.328, Art. 5, 2009-01-30 official text · verified 2026-10-26

4. Work accident and occupational disease insurance is funded by a basic employer contribution of 0.90 percent of taxable pay plus an additional contribution set by activity and risk that cannot exceed 3.4 percent.
Cost to do it: 0.90 percent basic: CLP 18,000 a month on CLP 2,000,000, plus the additional rate for the activity.Ley Nº 16.744, Art. 15, 1988-12-29 official text · verified 2026-10-26

5. Workers contribute 10 percent of taxable pay to their individual pension account, plus a fee set by their pension fund manager. For 2026 the monthly taxable pay cap is 90.0 UF for pension, health and work accident contributions and 135.2 UF for unemployment insurance, applying from February 2026 pay.
Cost to do it: Caps of about CLP 3,709,897 and CLP 5,573,090 a month at the UF of 26 October 2026.
Example: Pension contributions stop growing above CLP 3,709,897 of monthly pay. / About US$3,760.36 and US$5,648.90 a month.Decreto Ley Nº 3.500; Superintendencia de Pensiones 2026 caps, DL 3.500 art. 16 and art. 17, 2026-02-01 official text · verified 2026-10-26

6. Companies may credit approved training costs against first category tax up to a yearly ceiling based on taxable payroll. Ley Nº 21.850 cuts that ceiling from 1 percent to 0.7 percent of annual taxable payroll and limits the share of each course that the credit can fund to 80, 50 or 15 percent depending on whether the trainee earns up to 25 UTM, up to 50 UTM or more; the company pays the rest and cannot pass it to the worker.
Cost to do it: On annual payroll of CLP 986,580,000, the credit ceiling falls from CLP 9,865,800 to CLP 6,906,060.
Example: US$10,000 to US$7,000 of credit ceiling on US$1,000,000 of payroll.Ley Nº 19.518, as amended by Ley Nº 21.850, Ley Nº 19.518 art. 36 and art. 37; Ley Nº 21.850 art. 29, 2026-10-17 official text · verified 2026-10-26 · changed: Ley Nº 21.850 (Diario Oficial 17 October 2026) cut the training credit ceiling from 1 percent to 0.7 percent of taxable payroll and set the 80, 50 and 15 percent co financing tiers, in force from 1 November 2026.

From	Employer rate	Monthly cost on CLP 2,000,000 of pay	In USD
August 2025	1.0 percent	CLP 20,000	US$20.27
August 2026	3.5 percent	CLP 70,000	US$70.95
August 2027	4.25 percent	CLP 85,000	US$86.16
August 2028	5.0 percent	CLP 100,000	US$101.36
August 2029	5.7 percent	CLP 114,000	US$115.55
August 2030	6.4 percent	CLP 128,000	US$129.74
August 2031	7.1 percent	CLP 142,000	US$143.93
August 2032	7.8 percent	CLP 156,000	US$158.12
August 2033	8.5 percent	CLP 170,000	US$172.31

Employer pension contribution schedule under Ley Nº 21.735 fourth transitory article (base case; steps from 5.7 percent may be lower if the Ley Nº 21.713 revenue evaluation falls short).

Monthly taxable pay	Tax withheld	Effective rate
CLP 900,000	CLP 0	0.0 percent
CLP 1,500,000	CLP 21,038	1.4 percent
CLP 3,000,000	CLP 114,457	3.8 percent
CLP 6,000,000	CLP 576,238	9.6 percent
CLP 10,000,000	CLP 1,817,439	18.2 percent
CLP 25,000,000	CLP 7,199,098	28.8 percent

Monthly second category tax withheld at the October 2026 UTM of CLP 72,151 (DL Nº 824 art. 43 Nº 1).

Worked example

A Chilean SpA hires an engineer on an indefinite contract at CLP 2,000,000 a month (US$2,027.21). From August 2026 the employer pays 3.5 percent pension (CLP 70,000), 2.4 percent unemployment insurance (CLP 48,000) and 0.90 percent basic accident insurance (CLP 18,000), a total of CLP 136,000 (US$137.85) a month before any additional accident rate.
The engineer contributes 10 percent (CLP 200,000) to the pension account plus the fund fee, and 0.6 percent (CLP 12,000) to unemployment insurance. The employer withholds second category tax on the resulting taxable pay and pays all withholdings and contributions with its monthly filings.
For a manager earning above the 90 UF cap, employer and employee pension contributions are computed only on 90 UF, while income tax withholding applies to the full taxable pay.

Step by step

Register as employer and choose the work accident insurance administrator (mutual or state institute).
Each month, compute taxable pay, apply the caps, and withhold employee pension, health, unemployment contributions and second category tax.
Pay employer contributions, including the Ley Nº 21.735 contribution at the rate in force for that month.
Declare and pay second category tax withholdings by the 12th of the following month (art. 79).
Budget the yearly August step ups of the employer pension contribution through 2033.
Plan training through the training tax franchise within the new 0.7 percent ceiling.

Common traps

The employer pension contribution steps up every August; payroll budgets set in January will be short.
Fixed term and per project contracts cost 3 percent unemployment insurance instead of 2.4 percent.
Accident insurance has an additional rate by activity and claims record of up to 3.4 percent on top of 0.90 percent.
Training costs above the new 80, 50 or 15 percent co financing tiers cannot be charged to workers.
The Pro Pyme 12.5 percent rate is conditional on the employer pension contribution being at its scheduled level at each year end (see corporate income tax).

Sources

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