Income tax in Honduras
October 12, 2018
Residents are taxed on their worldwide income. Married couples are generally taxed jointly, but they may elect for separate taxation.
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.
|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 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.
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.
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.