Countries › Panama › Guide › 6. Taxes › Payroll taxes in Panama: social security at 13.25 percent for employers rising to 15.25 percent by 2029, 9.75 percent for employees and salary income tax withholding

Payroll taxes in Panama: social security at 13.25 percent for employers rising to 15.25 percent by 2029, 9.75 percent for employees and salary income tax withholding

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Last verified: 2026-10-29 · Status: Changing

Employers pay Caja de Seguro Social contributions of 13.25 percent of salaries, rising to 14.25 percent from 1 March 2027 and 15.25 percent from 1 March 2029 under Ley 462 de 2025, and withhold 9.75 percent from employees. The thirteenth month salary carries special contributions of 10.75 percent for the employer and 7.25 percent for the employee. Employers also withhold salary income tax using the individual schedule, which exempts the first B/.11,000 a year.

Panama's currency, the balboa (B/.), is at par with the US dollar, which circulates freely as legal tender; the Superintendencia de Bancos states that the balboa's value is on a par with the US dollar (checked 29 October 2026). USD figures therefore equal the balboa figures.

Key facts

Employer social security contribution (until 28 February 2027)	13.25 %Ley 51 de 2005 art. 101 (Ley 462 de 2025), as of 2026-10-29 · in force
Employer social security contribution from 1 March 2027	14.25 %Ley 51 de 2005 art. 101 (Ley 462 de 2025), as of 2026-10-29 · pending
Employer social security contribution from 1 March 2029	15.25 %Ley 51 de 2005 art. 101 (Ley 462 de 2025), as of 2026-10-29 · pending
Employee social security contribution	9.75 %Ley 51 de 2005 art. 101 (Ley 462 de 2025), as of 2026-10-29 · in force
Employer contribution on thirteenth month salary	10.75 %Ley 51 de 2005 art. 101 numeral 4, as of 2026-10-29 · in force
Top individual income tax rate	25 %Código Fiscal art. 700, as of 2026-10-29 · in force
Annual net taxable income taxed at 0 percent	11000 PABCódigo Fiscal art. 700, as of 2026-10-29 · in force
Exchange rate used for USD conversions	1 PAB per USDBalboa at par with the US dollar (Superintendencia de Bancos), as of 2026-10-29 · in force

The rule

1. Contributions financing sickness and maternity and disability, old age and death are: employees 9.75 percent of salary; employers 13.25 percent of salaries from the law's entry into force until 28 February 2027, 14.25 percent from 1 March 2027 to 28 February 2029 and 15.25 percent from 1 March 2029; self employed workers 9.36 percent of insurable income for disability, old age and death and 8.5 percent for voluntary sickness and maternity coverage.
Example: Monthly salary B/.2,000: employee contribution B/.195; employer B/.265 now, B/.285 from March 2027 and B/.305 from March 2029. / US$2,000 salary: US$195 employee, US$265 employer (US$305 from March 2029).Ley 51 de 2005 art. 101 as worded by Ley 462 de 2025 art. 84, art. 101 numerals 1 to 3, 2025-03-18 official text · verified 2026-10-29 · changed: Ley 462 de 2025 raised the employer contribution in three steps to 15.25 percent by March 2029.

2. Each of the three installments of the thirteenth month salary (décimo tercer mes) carries a special employer contribution of 10.75 percent and a special employee contribution of 7.25 percent.Ley 51 de 2005 art. 101 numerals 4 and 5 as worded by Ley 462 de 2025 art. 84, art. 101 numerals 4 and 5, 2025-03-18 official text · verified 2026-10-29

3. Employees' income tax follows the individual schedule: nothing on net taxable income up to B/.11,000, 15 percent on the excess up to B/.50,000 and B/.5,850 plus 25 percent above B/.50,000. Employees with a single employer whose tax and contributions were withheld at source need not file a return.
Example: Annual salary B/.36,000 with no deductions: 15 percent of B/.25,000, B/.3,750 a year. / US$36,000 salary, US$3,750 income tax.Código Fiscal art. 700 as worded by Ley 8 de 2010 art. 10; art. 710 parágrafo 1 as worded by Ley 52 de 2012 art. 5, art. 700 and art. 710, 2012-08-28 official text · verified 2026-10-29

4. Licensed multinational headquarters (SEM) and EMMA companies may deduct all employee remuneration even where the employee is exempt from income tax under their special laws.Ley 41 de 2007 art. 21 as worded by Ley 57 de 2018 art. 5, art. 21, 2018-10-24 official text · verified 2026-10-29

Period	Employer rate	Employer cost	Employee rate	Employee contribution
Until 28 Feb 2027	13.25 percent	B/.265	9.75 percent	B/.195
1 Mar 2027 to 28 Feb 2029	14.25 percent	B/.285	9.75 percent	B/.195
From 1 Mar 2029	15.25 percent	B/.305	9.75 percent	B/.195

Monthly cost of a B/.2,000 (US$2,000) salary under Ley 51 de 2005 art. 101 as worded by Ley 462 de 2025.

Worked example

An employee earns B/.3,000 (US$3,000) a month, B/.36,000 a year, with no personal deductions.
Each month the employer withholds B/.292.50 of social security (9.75 percent) and about B/.312.50 of income tax (B/.3,750 a year), and pays B/.397.50 of employer contributions (13.25 percent), rising to B/.457.50 a month from March 2029.
On the thirteenth month installments the rates are 10.75 percent for the employer and 7.25 percent for the employee.

Step by step

Register as an employer with the Caja de Seguro Social before hiring.
Withhold employee social security and income tax monthly and pay them with the employer share.
Budget the employer increases of March 2027 and March 2029 in multiyear payroll costs.
Apply the special thirteenth month rates to each of its three installments.

Common traps

Employer contributions rise by one point in March 2027 and again in March 2029, so labor cost forecasts made in 2025 are already stale.
The thirteenth month salary has its own contribution rates, not the ordinary ones.
Occupational risk premiums are set separately by activity and are not included in the rates above.

Sources

Related: Panama country profile · live dashboard · central bank and release calendar · our posts on X · where Argentina is involved, see The Argentine Thread guide

← Other business taxes in Panama: the Aviso de Operación tax of 2 percent of capital, property tax schedules, real estate transfer tax and monthly stamp tax returnsTax incentives in Panama: multinational headquarters (SEM) and EMMA at 5 percent, free zones and the Colón Free Zone, and the MSME schedule →

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