INDIVIDUAL TAXATION

Residents are taxed on their worldwide income. Married couples are generally taxed jointly, but they may elect for separate taxation.

INCOME TAX

Taxable income includes (1) employment income, (2) business income, (3) income from profession, (4) investment income, and (5) other income. Income tax is levied at progressive rates and the tax bands are updated every five years.

INCOME TAX
TAXABLE INCOME, HNL (US$)	TAX RATE
Up to 116,402 (US$5,352)	0%
116,402 - 200,000 (US$9,195)	15% on band over US$5,352
200,000 - 500,000 (US$22,989)	20% on band over US$9,195
Over 500,000 (US$22,989)	25% on all income over US$22,989
Source: Global Property Guide

Resident individuals are entitled to the following deductions:

• Allowance of HNL40,000 (US$1,839) for medical expenses
• Donations to legally recognized state institutions, educational institutions, and sport institutions

RENTAL INCOME
Rental income is taxed at progressive rates. Income-generating expenses are deductible when calculating the taxable income.

CAPITAL GAINS TAX

Capital gains realized by residents from selling real property are taxed at a fixed rate of 10%. The taxable gain is the gross selling price less acquisition costs and improvement costs.

Capital gains less than HNL50,000 (US$2,299) realized by resident individuals from selling their principal residence are exempt from taxation only if the gains are reinvested in a property that would serve as their principal residence. Gains exceeding this threshold amount are taxable.

PROPERTY TAX

Real Estate Tax (Impuesto sobre bienes inmuebles)

Real estate tax is levied on all real property in Honduras at progressive rates. The base is the property´s declared value. Real estate tax is levied at 5% for properties located in the Central District.

The tax is levied at progressive rates, from HNL1.50 (US$0.07) to HNL5.00 (US$0.23) per thousand calculated over the property value in urban areas.

Real estate tax is levied at progressive rates, from HNL1.50 (US$0.07) to HNL2.50 (US$0.12) per thousand calculated over the property value in rural areas.

CORPORATE TAXATION

INCOME TAX

Income earned by companies is subject to corporate income tax at a flat rate of 25%. Taxable income is calculated by deducting income-generating expenses from the gross income.

CAPITAL GAINS TAX

Capital gains earned by companies are subject to capital gains tax at a flat rate of 10%. Acquisition costs and improvement costs are deductible when calculating taxable capital gains.