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PS 1044

Para añadir un inciso (39) al apartado (a) de la Sección 1031.02 de la Ley Núm. 1-2011, según enmendada, conocida como “Código de Rentas Internas de Puerto Rico de 2011”, a los fines de eximir a los empleados y funcionarios públicos del Gobierno de Puerto Rico, sus instrumentalidades, corporaciones públicas y municipios del pago de contribuciones sobre los ingresos devengados por concepto de la liquidación del pago de licencias por vacaciones y enfermedad acumuladas como resultado de su retiro, renuncia o cese de servicio; y para otros fines relacionados.

2025-2028 Session

Puerto Rico bill exempts public employees' lump-sum vacation and sick leave payouts from income tax upon retirement or resignation.

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Bill Summary · PS 1044

Legislative bill overview

Bill PS 1044 proposes to amend Puerto Rico's Internal Revenue Code (2011) to exempt public employees and officials from paying income taxes on lump-sum payments received for accumulated vacation and sick leave when they retire, resign, or are terminated from employment. This exemption would apply to employees of the Puerto Rico government, its agencies, public corporations, and municipalities.

Why is this important

This measure directly affects thousands of public sector workers by allowing them to receive accrued leave payouts tax-free upon separation from employment. The fiscal impact depends on how many public employees retire or leave annually and the average value of their accumulated leave balances. This could reduce government tax revenue while potentially increasing take-home compensation for departing public workers.

Potential points of contention

  • Revenue loss: The Treasury Department would lose tax revenue from these payments, which could affect Puerto Rico's fiscal recovery plan obligations and budget allocations
  • Equity concerns: Private sector employees typically must pay taxes on severance and similar payments, potentially creating unequal treatment between public and private workers
  • Scope definition: The bill may need clarification on what constitutes "accumulated licenses" and whether all public employee categories are included uniformly
  • Administrative complexity: Implementation requires tracking which payments qualify for exemption and coordinating between multiple government entities and municipalities

Compiled from official sources — confirm details with the bill’s official record.

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