The Tax Administration Service (SAR) of Honduras has published the new progressive Income Tax (ISR) table, effective for the 2025 period and applicable to individuals. This table was calculated considering the year-over-year variation of the 2024 Consumer Price Index (CPI), which was 3.88%. This data was published by the Central Bank of Honduras (BCH).    

The National Government has predicted that this tax reform will have a negative effect on public safety, as tax collection is expected to be reduced by L392 million ($15.36 million). However, it will also result in an increase in the number of taxpayers, with a lower percentage being applied to them.  

The established limits on annual net taxable income exclude L40,000 for medical expenditure, although these are included in the monthly salary to divide it by 12 months. As for the marked margins, as can be seen in the table of net annual taxable income, up to the first 217,493.16 lempiras, no tax is payable.

However, in the 2024 financial year, this limit was set lower at 209,369.62 lempiras. The rise in the terms limit applies to individuals who are not exempt from paying Income Tax. The second table changes less than the first one, although they are included in the monthly salary to divide it by the 12 months of the year. In any case, the last bracket in particular is extended to 67,604.37 lempiras so that 25% can be applied.  However, last year it was set at 65,203.8 lempiras. 

The Income Tax progressive table is subject to change with a view to reducing tax payments for individuals with a lower income. From the 2023 fiscal year, taxpayers with an income below L199.039,47 were exempt from tax. 

As a company, What do you need to do?

For companies managing payroll, it is essential to ensure that accounting and human resources systems reflect these new tax thresholds. Changes in the ISR brackets may require updates in the calculation of withholdings and salary adjustments.

Key actions to consider:

  1. Review payroll systems: make sure the new limits and rates are being integrated to avoid errors in deductions.
  2. Communicate changes to the employees: explain to your team how these updates may benefit their disposable income.
  3. Maximize tax efficiency: identify opportunities to take advantage of deductions, such as the 40,000 lempiras for medical expenses, that are not included in annual taxable income.

The strategic role of Honduras

Honduras remains an attractive destination for foreign investment thanks to its strategic location between the Caribbean Sea and the Pacific Ocean, especially in agricultural markets. Understanding and complying with tax regulations is key for international companies in order to operate efficiently in the country. Therefore, if you would like Auxadi to manage your accounting, payroll and taxes in Honduras, do not hesitate to contact us.

Can Auxadi help?

Auxadi can become your ideal partner. We offer a one stop shop value added outsourcing services in the areas of accounting and reporting, tax compliance, payroll management and representation services, among others.

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Founded in 1979, Auxadi is a family-owned business working for multinational corporations, private equity funds and real estate funds. It’s the leading firm in international accounting, tax compliance and payroll services management connecting Europe and the Americas with the rest of the world, offering services in 50 countries. Its client list includes many of the top 100 PERE companies. Headquartered in Madrid, with offices in US and further 22 international subsidiaries, Auxadi serves 1,500+ SPVs across 50 jurisdictions.

All information contained in this publication is up to date on 2024. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice.No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.