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Honduras Personal Income Tax Guide 2026

Honduras operates a progressive Impuesto Sobre la Renta (ISR) system with rates from 10% to 25% across 5 annual brackets. The first HNL 175,000 of annual income is tax-free. The tax is administered by the Servicio de Administración de Rentas (SAR). The tax year follows the calendar year (January to December).

Overview — Servicio de Administración de Rentas (SAR)

The Servicio de Administración de Rentas (SAR) administers all domestic tax collection including personal income tax (ISR), corporate tax, VAT (ISV), and other levies. Tax residents are taxed on worldwide income; non-residents are taxed only on Honduras-source income. Residency is determined by physical presence of 183 days or more in a calendar year. Employees have tax withheld at source under the ISR withholding system. Self-employed individuals and business owners file annual returns directly with SAR. The currency is the Honduran Lempira (HNL).

ISR Tax Brackets 2026 — Annual Rates

Honduras uses a progressive annual bracket system with 5 bands and a top marginal rate of 25%. For 2026, the ISR brackets are:

  • 0% — on the first HNL 175,000 per year (tax-free threshold)
  • 10% — on income from HNL 175,001 to HNL 400,000
  • 15% — on income from HNL 400,001 to HNL 1,000,000
  • 20% — on income from HNL 1,000,001 to HNL 2,500,000
  • 25% — on income above HNL 2,500,000

Effective tax rates are modest due to the HNL 175,000 tax-free threshold. A taxpayer earning HNL 500,000 per year pays approximately HNL 32,500 in ISR — an effective rate of ~6.5%.

Personal Deductions & Reliefs

Honduras offers several deductions that reduce taxable income before applying progressive brackets:

  • Personal exemption — HNL 175,000 per year for all resident individuals
  • Dependent deduction — deductible amounts for spouse, children under 21, and dependants with disabilities
  • Medical expenses — actual medical, dental, and hospital expenses up to specified limits
  • Education expenses — tuition fees for dependants at registered educational institutions
  • Mortgage interest — interest paid on loans for primary residence
  • Social security contributions — IHSS and RAP contributions are deductible

These deductions reduce taxable income before applying the progressive brackets. Deductions must be supported by receipts and documented in the annual tax return.

ISR Withholding

Employers must register for ISR with SAR and deduct tax monthly from employee salaries. The employer calculates monthly tax on gross salary, applies the annual exemption proportionally, deducts IHSS and RAP contributions, and remits the net tax to SAR monthly. Employers file monthly ISR withholding returns via SAR's online portal. Employees receive annual tax certificates for their records. Failure to remit ISR attracts penalties and interest on overdue amounts.

Self-Employed Individuals

Self-employed individuals and sole proprietors are taxed under the same progressive rates as employees, but must file self-assessment returns. Estimated tax is payable in quarterly instalments. The annual return must be filed by 31 March of the following year. Self-employed individuals can deduct allowable business expenses (rent, utilities, supplies, salaries) to arrive at taxable profit. Proper books of account must be maintained and registered with SAR.

FAQs

Do I need to file a return if all tax was withheld by my employer?

Yes, all resident individuals earning above the exemption threshold must file an annual ISR return by 31 March, even if all tax was withheld at source. The process is simplified for PAYE-only employees.

Is overtime pay taxable?

Yes, all remuneration including basic salary, overtime, bonuses, commissions, and allowances are taxable as employment income under ISR.

Can married couples file jointly?

Honduras allows joint filing for married couples, which can be beneficial where one spouse has little or no income. Both spouses must sign the return.

What are the penalties for late filing?

Late filing attracts fines and interest charges. SAR imposes progressive penalties depending on the duration of the delay and the amount of tax due.

Disclaimer

This guide provides general information about Honduran personal income tax for the 2026 tax year. Tax laws, rates, and regulations may change. Always consult with a qualified Honduran tax advisor or the Servicio de Administración de Rentas for advice specific to your situation. InvestmentKit does not provide tax advice.

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