Leaving Act 60: The Exit Door, the Re-Entry Year, and the 10-Year Shadow

Leaving Act 60 is a normal, administrable event — in 2025, 887 people voluntarily surrendered their decrees to DDEC's Office of Incentives. When you leave: the §933 exclusion falls away for any year you fail the residency tests, the decree's obligations generally continue until it is formally surrendered, and pre-move gains keep their 10-year U.S.-source treatment wherever you go. Two exits worry people — yours, and the program's — in that order.

What happens the year you leave — or fail the residency tests?

The federal benefit is annual. Fail the bona fide residency tests for a year — or simply leave — and the §933 exclusion does not apply for that year: regular federal tax applies to that year's income, per IRS Publication 570. A failed year is a year outside the exclusion, whatever the surrounding years look like.

Does the decree end automatically when you leave?

No — the decree doesn't switch off on its own. It is a contract with the government of Puerto Rico, and its obligations — annual reports, the donation, the filing fee — generally continue until the holder formally surrenders it. Which is what 887 people did in 2025: the exit door exists, and it works. Voluntary surrender is different from losing a decree involuntarily — that failure mode is covered in the common mistakes guide.

What happens the year you move back to the mainland?

The re-entry year is a paperwork year. Part-year rules exist for splitting the year, and Form 8898 — the same form filed when residency begins — is filed again for the year it ends: required when worldwide gross income is more than $75,000, with a $1,000 penalty possible for failure to file absent reasonable cause. The detail lives in that year's filings.

What happens to gains from before your original move?

One clock ignores your itinerary entirely. Appreciation accrued before your original move is generally U.S.-source if realized within 10 years of the move (Treas. Reg. §1.937-2) — whether you stay, leave, or return. Puerto Rico taxes it at 10% inside the window, 5% after. Leaving does not pause the clock; coming back does not restart it.

How long do the decree and the program actually run?

An individual decree is a 15-year contract. Act 38-2026 extended the program's horizon from 2035 to 2055 while tightening terms for applications filed after December 31, 2026; existing holders keep their terms and may elect into the amended framework (the 2026 changes).

Will Congress end Act 60?

Handled factually: as of July 2026, no federal legislation targeting the program has been enacted. Oversight is real, and it has a paper trail:

Federal attention today runs through examination, not legislation — the IRS operates an active LB&I campaign on Act 60 residency and sourcing (the audits guide). The honest posture: the exit door works, the re-entry year is a paperwork year, the 10-year shadow doesn't negotiate — and on the enacted record, the program's risk has been oversight and amendment, not abolition. None of that predicts what any legislature does next.