{"id":8570,"date":"2026-01-16T14:10:11","date_gmt":"2026-01-16T14:10:11","guid":{"rendered":"https:\/\/alvatax.com\/new\/?p=8570"},"modified":"2026-08-13T11:00:06","modified_gmt":"2026-08-13T11:00:06","slug":"tax-reform-bill-house-bill-1014-senate-bill-912","status":"publish","type":"post","link":"https:\/\/alvatax.com\/?p=8570","title":{"rendered":"Tax Reform Bill (House Bill 1014, Senate Bill 912"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"8570\" class=\"elementor elementor-8570\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-b6beca5 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"b6beca5\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-66 elementor-top-column elementor-element elementor-element-9646cf3\" data-id=\"9646cf3\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-f9cd701 elementor-widget elementor-widget-spacer\" data-id=\"f9cd701\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"spacer.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-spacer\">\n\t\t\t<div class=\"elementor-spacer-inner\"><\/div>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-9305b80 elementor-widget elementor-widget-heading\" data-id=\"9305b80\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h4 class=\"elementor-heading-title elementor-size-default\">Tax Reform Bill (House Bill 1014, Senate Bill 912<\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-0739411 elementor-widget elementor-widget-heading\" data-id=\"0739411\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h6 class=\"elementor-heading-title elementor-size-default\">By: Nelson R. Gonz\u00e1lez P\u00e9rez<\/h6>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-81bd9c6 elementor-widget elementor-widget-text-editor\" data-id=\"81bd9c6\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>On January 12, 2026, the Puerto Rico Legislature introduced House Bill 1014 and Senate Bill 912. These bills propose amendments to Sections 1010.01, 1021.01, 1021.02, 1021.06, 1022.07, 1031.02, 1033.18, 1078.02, 1081.01, 3030.03, 4030.05, 4030.17, and 6041.11 of the Puerto Rico Internal Revenue Code of 2011, as amended (\u201cPRIRC\u201d).\u00a0 The primary objective of the proposed legislation is to reduce the tax burden on taxpayers in Puerto Rico and address other related fiscal matters.<\/p><p><strong>Purpose<\/strong><\/p><p>This proposed legislation represents the second phase of Puerto Rico\u2019s tax reform and seeks to establish a fairer and simpler tax system by reducing the tax burden on individuals, particularly the working middle class.<\/p><p><strong>What does this measure seek to accomplish?<\/strong><\/p><p>Currently, income tax rates in Puerto Rico are significantly higher than U.S. federal rates, negatively impacting the competitiveness and perceived fairness of the tax system. The proposed legislation aims to narrow this gap by reducing effective income tax rates. Additionally, future phases are expected to focus on modernizing consumption taxes, corporate taxes, and municipal taxes to further enhance the efficiency and equity of the tax system.<\/p><p>The bill also seeks to reduce the individual tax burden by reviewing and adjusting personal exemptions, dependent exemptions, and exemptions for retirees to account for inflation, as these amounts have not been updated since 2011. In addition, the proposal aims to simplify the tax system by eliminating complex components such as gradual adjustment, the tax computation discount, and the alternative basic tax on income subject to preferential rates, thereby facilitating compliance and improving fiscal administration.<\/p><p>Among the most important measures proposed by this bill are the following:<\/p><ul><li><strong>Reduction in Individual Income Tax Rates<\/strong><br \/>For tax years beginning after December 31, 2024, the individual income tax brackets would be as follows:<\/li><\/ul><table width=\"559\"><tbody><tr><td width=\"272\"><p><strong>Net Taxable Income<\/strong><\/p><\/td><td width=\"287\"><p><strong>Tax<\/strong><\/p><\/td><\/tr><tr><td width=\"272\"><p>Not over $12,500<\/p><\/td><td width=\"287\"><p>0%<\/p><\/td><\/tr><tr><td width=\"272\"><p>Over $12,500 but not over $25,000<\/p><\/td><td width=\"287\"><p>6% of the excess over $12,500<\/p><\/td><\/tr><tr><td width=\"272\"><p>Over $25,000 but not over $50,000<\/p><\/td><td width=\"287\"><p>$750 + 12% of the excess over $25,000<\/p><\/td><\/tr><tr><td width=\"272\"><p>Over $50,000 but not over $100,000<\/p><\/td><td width=\"287\"><p>$3,750 + 24% of the excess over $50,000<\/p><\/td><\/tr><tr><td width=\"272\"><p>Over $100,000 but not over $150,000<\/p><\/td><td width=\"287\"><p>$15,750 + 29% of the excess over $100,000<\/p><\/td><\/tr><tr><td width=\"272\"><p>Over $150,000<\/p><\/td><td width=\"287\"><p>$30,250 + 33% of the excess over $150,000<\/p><\/td><\/tr><\/tbody><\/table><ul><li><strong>Elimination of Gradual Adjustment<\/strong>: The gradual adjustment applicable to individuals with income exceeding $500,000 will be eliminated for tax years beginning after December 31, 2024.<\/li><li><strong>Removal of 8% and 5% discounts<\/strong>: The current 8% and 5% discounts on income tax will be eliminated for tax years beginning after December 31, 2024.<\/li><li><strong>Elimination of Preferential Rate Income for Alternate Basic Tax (\u201cABT\u201d)<\/strong>: Income subject to preferential tax rates will no longer be included to determine net income subject to ABT for tax years beginning after December 31, 2024.<\/li><li><strong>Optional Computation Method<\/strong>: Individuals and corporations eligible for the optional computation method may elect this method even if they have a balance due on their income tax return, provided the full balance due is paid no later than the filing deadline, including any filing extension.<\/li><li><strong>Increase in Exemptions<\/strong>: The exemption per dependent will increase to $5,000 for tax years beginning after December 31, 2024, and will be subject to inflation adjustments in subsequent years. The personal exemption will also be subject to inflation adjustments going forward.<\/li><li><strong>Termination of Full Excise Tax Exemption for Alternative Energy Vehicles<\/strong>: The full exemption from excise taxes on motor vehicles powered by alternative or hybrid energy will end effective July 1, 2026.<\/li><li><strong>Repeal of Sales and Use Tax Exemptions<\/strong>: Sections 4030.05 and 4030.17 of the PRIRC will be repealed, eliminating the sales and use tax exemptions for tangible personal property considered promotional material (\u201cgiveaways\u201d) introduced into Puerto Rico and for solar electric equipment, respectively.<\/li><\/ul><p><strong>\u00a0<\/strong><strong>Effective Date<\/strong><\/p><p>All provisions will take effect immediately upon enactment, except for the termination of the excise tax exemption for alternative and hybrid energy vehicles and the repeal of the sales and use tax exemptions, which will apply to transactions occurring on or after July 1, 2026.<\/p><p><strong>ATBA\u2019s Comments<\/strong><\/p><p>Given the scope and importance of the proposed amendments, timely approval of these bills is essential to provide the Puerto Rico Treasury Department with adequate time to implement the required administrative and system updates ahead of the 2026 tax filing season. Prompt enactment will facilitate a seamless transition and support proper compliance by both taxpayers and the government.<\/p><p>However, several Representatives and Senators have raised concerns about the elimination of sales and use tax exemptions for solar equipment, as well as the new application of excise taxes to vehicles powered by alternative or hybrid energy.\u00a0 These matters will be closely monitored as the legislative process continues.<\/p><p>We will continue to provide updates on the status and progression of these bills.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t<div class=\"elementor-column elementor-col-33 elementor-top-column elementor-element elementor-element-c72ae95\" data-id=\"c72ae95\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-9aede8b elementor-widget elementor-widget-spacer\" data-id=\"9aede8b\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"spacer.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-spacer\">\n\t\t\t<div class=\"elementor-spacer-inner\"><\/div>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-5c2f81f elementor-widget elementor-widget-rt-team\" data-id=\"5c2f81f\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"rt-team.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"row row-cols-lg-1 row-cols-sm-2 row-cols-1 gutters-enable\">\n    <div class=\"col\">\n    <div class=\"team-layout-3\">\n      <div class=\"team-wrap\">\n        <div class=\"item-img\">\n                                  <ul class=\"item-social\">\n                          <\/ul>\n                  <\/div>\n        <div class=\"item-content\">\n          <h3 class=\"item-title\"><a href=\"https:\/\/alvatax.com\/?bizcon_team=nelson-r-gonzalez-perez\">NELSON R. GONZ\u00c1LEZ P\u00c9REZ<\/a><\/h3>\n                    <div class=\"item-subtitle\">Supervising Senior<\/div>\n                  <\/div>\n      <\/div>\n    <\/div>\n  <\/div>\n  <\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-52a2447 elementor-widget elementor-widget-rt-contact-box\" data-id=\"52a2447\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"rt-contact-box.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\n<div class=\"contact-list\">\n    <h3 class=\"item-title\">\n                                    <i class=\"fas fa-map-marker-alt\"><\/i>\n                Contact us    <\/h3>\n        <ul>\n         \n        <li>\n            Email: ngonzalez@alvatax.com <br>\nTel: 787- 999-4400        <\/li>\n            <\/ul>\n    <\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-61cf417 elementor-shape-rounded elementor-grid-0 e-grid-align-center elementor-widget elementor-widget-social-icons\" data-id=\"61cf417\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"social-icons.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-social-icons-wrapper elementor-grid\" role=\"list\">\n\t\t\t\t\t\t\t<span class=\"elementor-grid-item\" role=\"listitem\">\n\t\t\t\t\t<a class=\"elementor-icon elementor-social-icon elementor-social-icon-facebook elementor-repeater-item-6ee2851\" href=\"https:\/\/www.facebook.com\/p\/Alvarado-Tax-Business-Advisors-100090194862354\/\" target=\"_blank\">\n\t\t\t\t\t\t<span class=\"elementor-screen-only\">Facebook<\/span>\n\t\t\t\t\t\t<i aria-hidden=\"true\" class=\"fab fa-facebook\"><\/i>\t\t\t\t\t<\/a>\n\t\t\t\t<\/span>\n\t\t\t\t\t\t\t<span class=\"elementor-grid-item\" role=\"listitem\">\n\t\t\t\t\t<a class=\"elementor-icon elementor-social-icon elementor-social-icon-instagram elementor-repeater-item-3f4fa86\" href=\"https:\/\/www.instagram.com\/p\/DNqZv9sO8eo\/\" target=\"_blank\">\n\t\t\t\t\t\t<span class=\"elementor-screen-only\">Instagram<\/span>\n\t\t\t\t\t\t<i aria-hidden=\"true\" class=\"fab fa-instagram\"><\/i>\t\t\t\t\t<\/a>\n\t\t\t\t<\/span>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Tax Reform Bill (House Bill 1014, Senate Bill 912 By: Nelson R. Gonz\u00e1lez P\u00e9rez On January 12, 2026, the Puerto Rico Legislature introduced House Bill 1014 and Senate Bill 912. These bills propose amendments to Sections 1010.01, 1021.01, 1021.02, 1021.06, 1022.07, 1031.02, 1033.18, 1078.02, 1081.01, 3030.03, 4030.05, 4030.17, and 6041.11 of the Puerto Rico Internal&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"elementor_header_footer","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[29],"tags":[],"class_list":["post-8570","post","type-post","status-publish","format-standard","hentry","category-business-advisors"],"_links":{"self":[{"href":"https:\/\/alvatax.com\/index.php?rest_route=\/wp\/v2\/posts\/8570","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/alvatax.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/alvatax.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/alvatax.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/alvatax.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8570"}],"version-history":[{"count":13,"href":"https:\/\/alvatax.com\/index.php?rest_route=\/wp\/v2\/posts\/8570\/revisions"}],"predecessor-version":[{"id":8930,"href":"https:\/\/alvatax.com\/index.php?rest_route=\/wp\/v2\/posts\/8570\/revisions\/8930"}],"wp:attachment":[{"href":"https:\/\/alvatax.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8570"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/alvatax.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8570"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/alvatax.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8570"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}