1. What is Panama Salary Tax Calculation?

The Panama Salary Tax Calculator estimates your income tax and social security contributions based on your annual salary in Panamanian Balboas (PAB). Panama has a progressive income tax system and mandatory social security contributions.

2. How Does the Calculator Work?

The calculator uses the following formulas:

Where:

• Income Tax — Progressive tax with brackets:
  • 0% on first 11,000 PAB
  • 15% on amount between 11,001-50,000 PAB
  • 25% on amount above 50,000 PAB
• Social Security — 9.75% of salary up to 60,000 PAB maximum

3. Panama Tax Structure

Details: Panama's tax system includes income tax and mandatory social security contributions (CSS). The income tax is progressive while social security is a flat rate with a cap.

4. Using the Calculator

Tips: Enter your gross annual salary in Panamanian Balboas (PAB). The calculator will show your income tax, social security contributions, total taxes, and net salary.

5. Frequently Asked Questions (FAQ)

Q1: Are there deductions available?
A: Yes, Panama allows certain deductions like medical expenses and education costs which aren't included in this basic calculator.

Q2: Is social security capped?
A: Yes, social security contributions are only calculated on the first 60,000 PAB of annual salary.

Q3: Are bonuses taxed differently?
A: Bonuses are generally taxed as regular income in Panama.

Q4: What about thirteenth-month pay?
A: The mandatory thirteenth-month payment is taxed as regular income.

Q5: Are there local taxes?
A: No, Panama does not have municipal or state income taxes.