Paraguay Income Tax Calculator 2026
Last updated: January 2026
The Personal Income Tax (IRP - Impuesto a la Renta Personal) in Paraguay for 2026 has simple progressive rates with a very high exemption threshold, administered by the SET. Annual income up to ₲80,000,000 (approximately $10,500 USD) is exempt. Income from ₲80,000,001 to ₲120,000,000 is taxed at 8%, and income over ₲120,000,000 is taxed at 10%. Employee social security (IPS) at 9% is deducted before calculating taxable income. The employer contributes IPS 16.5%. Paraguay has one of the lowest income tax rates in Latin America. The high exemption means most minimum-wage workers pay no income tax. IRP is relatively new, having been introduced in stages starting in 2012.
FAQ
What are the IRP rates in Paraguay 2026?
Paraguay IRP has 3 brackets: up to ₲80,000,000 annually exempt, ₲80,000,001-₲120,000,000 at 8%, and over ₲120,000,000 at 10%. These are among the lowest income tax rates in Latin America.
What is the IPS employee deduction in Paraguay?
IPS (Instituto de Previsión Social) employee contribution is 9% of salary. The employer contributes 16.5%. IPS covers health insurance, pensions, and workplace accident insurance. It is deducted before calculating IRP taxable income.
Why is the IRP exemption so high in Paraguay?
The ₲80,000,000 annual exemption (about $10,500 USD) means most Paraguayan workers pay zero income tax. The IRP was designed to target higher earners. Paraguay's minimum wage is ₲2,798,309/month (₲33,579,708/year), well below the exemption.
How is IRP declared in Paraguay?
IRP is declared annually to the SET through the Marangatu electronic system. Taxpayers must file by March of the following year. Employers do not withhold IRP monthly — the taxpayer is responsible for the annual declaration and payment.
What deductions are allowed for IRP in Paraguay?
IRP deductions include: IPS contributions, personal and family medical expenses, educational expenses, home mortgage interest, donations to approved institutions, and documented business expenses for self-employed income. All deductions require invoices with RUC.