Important Warning
US expat taxes are complex. This guide provides educational information only. Tax rules change frequently. We strongly recommend consulting a qualified expat CPA for your specific situation in Panama.
US Expat Taxes in Panama: 2026 Guide
FEIE Eligibility in Panama
Panama qualifies for FEIE. Panama has a territorial tax system — income from outside Panama is not subject to Panamanian income tax. This makes Panama one of the most tax-efficient bases for US freelancers with non-Panamanian clients.
Compare FEIE vs Foreign Tax Credit →Tax Treaty Status
Tax Treaty: No
There is no income tax treaty between the US and Panama. The territorial tax system reduces the risk of double taxation, but no FTC credit mechanism exists for Panamanian taxes (which are typically zero on foreign income).
Local Income Tax
Why Freelancers Choose Panama
- ✓Territorial taxation — zero local tax on foreign-sourced freelance income
- ✓Uses US Dollar — no currency conversion risk
- ✓Pensionado Visa offers great discounts; Friendly Nations Visa for many nationalities
- ✓Low cost of living with modern infrastructure in Panama City
Banking in Panama
- •USD accounts at Banco General or Banistmo are easy to open
- •No need for currency conversion — Panama uses USD
- •Wise useful for receiving payments from international clients
Important Considerations
Recommended Tax Services
Free Expat Tax Calculators
Estimate your FEIE exclusion and compare it to the Foreign Tax Credit.
Tax Information Notice
This content is for informational and educational purposes only. It does not constitute tax, legal, or financial advice. Tax laws change frequently. Always consult a qualified CPA or Enrolled Agent for your specific situation.