Salvadorans Will Be Exempt From Taxes on 2023s Year-End Bonuses up to $1,500

By Eddie Galdamez  |  Nov 30th, 2023
El Salvador National PalaceEl Salvador National Palace. Image by ElSalvadorNews.

In the November 29 plenary session, the Salvadoran Legislative Assembly approved transitional provisions, indicating that the year-end bonuses for the current year, up to $1,500, will be exempt from income tax payments.

Eighty legislators supported the transitional provision, securing approval from all political parties.

The newly approved bill aims to benefit Salvadorans by providing them with additional funds during the holiday season and at the end of the year.

An estimated 700,000 employees in the public and private sectors are anticipated to benefit from the exemption of these taxes. For individuals receiving bonuses exceeding $1,500, taxes will only apply to the remaining amount.

We contribute to your economy during these end-of-year holidays. We approve transitional provisions so that you receive your bonus rent-free as long as it does not exceed $1,500. This way, you will have more money for your Christmas shopping or the start of the year. Salvadoran Legislative Assembly.

Since 2019, year-end bonuses of less than two Salvadoran minimum wages ($730) are already tax-exempt. With the transitional approved, the exempt amount increases to $1,500.

This day, we approve the exemption from income tax for bonuses that do not exceed $1,500. With this, we will benefit more than 700,000 workers. We value and recognize all these Salvadorans who, with their efforts, bring daily bread to their families. Ernesto Castro, Legislative Assembly President.

During the bill presentation, Salvadoran Minister of Finance Jerson Posada confirmed that the measure would result in the state losing approximately $4.3 million in revenue.

Even though all political parties voted in favor of the bill to exempt taxes on year-end bonuses, legislators took the opportunity to politicize the issue.

Deputy Claudia Ortiz of the Vamos political party voted in favor of the bill, emphasizing that additional measures are necessary to support Salvadorans in need.

Let us also work for those who will not receive a bonus: vendors deprived of their sales and people displaced from the markets… Everyone deserves a decent life, but thousands have fallen into poverty. Deputy Claudia Ortiz.

Living in El Salvador is challenging due to low wages and the high cost of living. This tax break on year-end bonuses will help many Salvadorans.