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Social security in Panama 2026
The employee side is a steady 11% of pay: 9.25% for pensions (disability, old age and death), 0.5% for health and maternity, and a 1.25% educational insurance tax — with no salary ceiling.
The 2025 pension reform left workers' rates untouched and put the increase on employers, whose share climbs from 13.25% to 15.25% by March 2029.
At a glance
- top rate
- 11% of full pay (9.75% + 1.25% education)
- entry band
- Same rates from the first balboa; the base cannot sit below the minimum wage
- tax year basis
- Monthly, withheld by the employer
- filing deadline
- Employer remits with monthly filings
- residency basis
- All resident employees; self-employed mandatory since March 2025
- regime flag
- No income tax deduction for what you pay in
Rates
Employee contributions (2026)
| Rate | Base | Applies to |
|---|---|---|
| 9.25% | Total remuneration, no ceiling | Disability, old-age and death cover |
| 0.5% | Total remuneration | Health and maternity |
| 1.25% | Total remuneration | Educational insurance tax |
| 9.36% | Declared income (min PAB 800/month) | Self-employed mandatory pension share since March 2025 — plus a voluntary 8.5% for health |
Thresholds & allowances
- No tax reliefContributions not deductible
Unusually, social security payments give no income tax deduction in Panama
- Base floorOfficial minimum wage
Contribution salary cannot be set below it
Residency
Residency trigger
All resident employees contribute on total remuneration including benefits in kind and bonuses; employers withhold and remit alongside income tax withholding.
Non-resident treatment
The employer's rising 13.25-15.25% share and the reform's guarantees sit on the company side; pensions eventually drawn from compliant plans are income-tax-exempt.
Notes
- The 2025 reform (Law 462) blended the old solidarity and individual-account systems and phased the employer rate up 3 points by 2029 — employee rates were spared.
- Retirement-plan payouts under the private pension-fund law are exempt from income tax once periodic payments begin.
- The 13th-month salary is part of the contribution base.
- Self-employed health cover (8.5%) is voluntary, on self-declared income of at least PAB 800 a month.
FAQ
How much social security do employees pay in Panama?
11% of full pay — 9.75% social security plus the 1.25% educational tax — with no salary ceiling.
Are Panamanian social security contributions tax-deductible?
No — none of the 11% reduces your income tax, an unusual feature of Panama's system.
Figures: tax year 2026, compiled from public sources. Not tax advice.