GuamTax Obligations Detailed

In Guam, employers adhere to a "mirror code" tax system, mirroring US federal tax laws but with distinct rates and specifics.

Income Tax

Guam's income tax system mirrors the US federal system, meaning employers withhold income tax from employee wages based on a progressive tax rate structure and filing status. While the tax brackets and rates are adjusted annually, the general structure remains consistent. Employers are responsible for withholding the correct amount of income tax from each employee's paycheck and remitting it to the Department of Revenue and Taxation. For specific details on 2025 rates and brackets, consult official resources from the Department of Revenue and Taxation.

Social Security and Medicare Taxes

Employers in Guam are responsible for withholding and matching employee contributions for Social Security and Medicare taxes. As of 2025, the Social Security tax rate is 6.2% for both employers and employees, applied to a wage base limit of $176,100. The Medicare tax rate is 1.45% for both employers and employees, with no wage base limit. These amounts are subject to change, so it's important to stay updated with official information.

Corporate Income Tax

Guam imposes a corporate income tax. As of 2025, the corporate tax rate stands at 21%. This rate, while influenced by the US federal corporate tax rate, is established independently by Guam. Additional levies may apply to income exceeding specified thresholds. For the latest information on corporate tax rates and regulations, consult the Guam Department of Revenue and Taxation.

Withholding and Reporting

Employers in Guam are required to withhold income tax, Social Security tax, and Medicare tax from employee wages. They must also register with the Department of Revenue and Taxation and report and remit these taxes according to the prescribed deadlines. Additionally, employers need to furnish employees with Form W-2, Wage and Tax Statement, by the end of January each year, detailing wages paid and taxes withheld during the prior year.

Unemployment Insurance Tax

Although specific details are not yet available for 2025, employers in Guam typically pay unemployment insurance tax to fund unemployment benefits for eligible workers. The rate and wage base are determined annually. Check with the Guam Department of Labor for updated information.

Other Taxes

There might be other local taxes or fees applicable depending on the nature of the business or industry. For example, Guam imposes a Gross Receipts Tax (GRT), a general sales tax on most business transactions. While this is not a direct employer tax, businesses need to collect and remit the GRT. Always consult official resources or a tax professional for a comprehensive understanding of applicable taxes and regulations in Guam.

Guam's income tax system mirrors the federal system, but with its own rates and deductions.

Guam Income Tax

Guam residents are taxed on all income, regardless of source. Non-US citizens or permanent residents are taxed only on Guam-source income. Gross income and deductions are determined using the same rules as the United States. Taxable income includes wages, salaries, commissions, fees, employer-paid expenses, and the fair market value of non-cash benefits like housing or vehicles. Guam's tax rates, similar to US rates, vary based on filing status (single, married filing jointly, head of household).

Federal Taxes

While Guam has its own income tax, residents also pay federal taxes like Social Security and Medicare.

• Social Security Tax: 6.2% of earned income up to a cap of $147,000, resulting in a maximum employee contribution of $9,114 for 2025.
• Medicare Tax: 1.45% of all earned income. An additional 0.9% Medicare tax applies to income exceeding $200,000 for single filers, $250,000 for joint filers, and $125,000 for married filing separately. This results in a 2.35% total Medicare tax rate above these thresholds.

Employer-Sponsored Deductions

Employers in Guam can offer a Section 125 Cafeteria Plan, allowing employees to pay for certain benefits with pre-tax dollars. These benefits include health insurance, dental insurance, supplemental health insurance, group life insurance (up to $50,000 coverage), health savings accounts, dependent care accounts, disability insurance, and flexible spending accounts.

Withholding and Filing

Guam does not use a state withholding form. Employers withhold taxes based on the employee's W-4 form. Employees with multiple jobs should ensure accurate withholding by completing Steps 3 through 4(b) of Form W-4 for their highest-paying job to optimize withholding calculations. For 2025, the tax filing season begins on January 27, 2025. E-filing is available for simple returns. More complex returns, including those with itemized deductions (Schedule A) or business income (Schedule C), require manual filing.

It's important to remember that this information is current as of February 5, 2025, and tax laws and regulations are subject to change. Consulting a tax professional for personalized advice is always recommended.

Guam uses a Gross Receipts Tax (GRT) rather than a traditional Value Added Tax (VAT).

Gross Receipts Tax (GRT) in Guam

Guam's GRT is a tax on the gross revenue of businesses, similar to a sales tax, and is currently levied at a rate of 4%. This replaced the previous rate of 2% effective October 1, 2018. This tax applies to most goods and services sold on the island.

Registration

Businesses operating in Guam and generating gross receipts are generally required to register for the GRT with the Department of Revenue and Taxation. Specific thresholds for mandatory registration may exist, so it's advisable to consult the Department of Revenue and Taxation for up-to-date requirements.

Filing and Payment

GRT returns are generally filed and paid monthly. Electronic filing is mandatory for business privilege tax returns, and the deadline is typically the 20th of the following month.

Exemptions

Certain goods and services might be exempt from GRT, such as those related to public utilities or non-profit organizations. Details on specific exemptions are available from the Department of Revenue and Taxation.

2025 Tax Season

The 2025 Tax Season in Guam began on Monday, January 27, 2025, and will conclude on Tuesday, April 15, 2025.

Other Taxes

• Use Tax: This tax applies to goods purchased outside of Guam and brought into the island for use or consumption. It complements the GRT.
• Corporate Income Tax: Guam has a corporate income tax with rates aligned with the US federal corporate income tax rates.
• Individual Income Tax: Guam residents are subject to individual income tax with rates and filing requirements generally similar to U.S. federal income tax. The tax filing season typically aligns with the US, starting in late January and ending in mid-April.
• Real Property Tax: Real property is subject to tax in Guam.
• Withholding Tax: Employers withhold taxes from employee wages for income tax purposes.

It's important to verify the latest regulations and requirements with the Department of Revenue and Taxation for any business operations in Guam, as tax laws can change. Information presented here is based on available details as of February 5, 2025, and might be subject to change.

Guam offers a range of tax incentives designed to stimulate economic activity and investment.

Qualifying Certificate Program

• Overview: Administered by the Guam Economic Development Authority (GEDA), this program offers incentives for investments that benefit the island's economy by generating employment, replacing imports, or enhancing infrastructure.
• Incentives:
  • Up to 75% rebate on corporate income tax for up to 20 years.
  • Up to 75% rebate on corporate dividend tax for up to 5 years.
  • Up to 100% abatement of real property tax for up to 10 years.
  • Up to 100% abatement of business privilege tax on income derived from specific products manufactured in Guam for up to 10 years.
• Eligibility: Trusts, partnerships, sole proprietorships, limited liability partnerships, limited liability companies, or corporations formed under Guam law and licensed to do business in Guam, engaged in eligible activities. Eligible activities include, but are not limited to: green technology, non-petroleum based fuels, agriculture, aquaculture, mariculture, manufacturing, commercial fishing, services, tourism, and affordable housing construction.
• Local Participation: Preference given to applicants with 51% or more local investment controlled by bona fide Guam residents.

Tax Rebates for Individuals

• Overview: Aimed at promoting economic development by attracting new residents to Guam.
• Incentives: A 75% rebate on personal income tax on earned income derived from sources outside Guam, the United States, its states, territories, or possessions. This rebate can increase to 100% under specific circumstances.
• Eligibility: Resident individual taxpayers, defined as U.S. citizens residing in Guam as per Section 935 of the Internal Revenue Code of 1954.

Opportunity Zones

• Overview: Designated low-income areas where investments made through Qualified Opportunity Funds (QOFs) can qualify for preferential federal tax treatment.
• Incentives:
  • Deferral, partial reduction, or elimination of federal taxes on capital gains invested in QOFs.
• Eligibility: Investments made within designated Opportunity Zones through certified QOFs.

Incentives for Specific Industries

• Insurance Companies:
  • 100% abatement of gross receipts tax on insurance premiums and other revenues.
  • Rebate of up to 100% of income taxes for insurance underwriting entities.
  • 100% rebate of income tax withheld on dividends from insurance underwriting businesses.
• Guam-Based Trusts: 100% rebate of income tax for 20 years on income earned outside Guam and the USA.

Other Tax Provisions

• Child Tax Credit: While Guam generally mirrors the federal tax code, there are efforts to extend and expand the Child Tax Credit, which could provide additional benefits for families. As of February 5, 2025, a bill was passed in the House of Representatives to expand the CTC, but it is awaiting Senate and Presidential approval. If passed, the expansion would continue the CTC beyond 2022 and increase the credits per child to $2,000 for the 2025 tax year.
• Business Privilege Tax (BPT): Guam's BPT, similar to a sales tax, is currently 5% for most businesses, but reduced to 3% for most small businesses. Businesses with annual revenues less than $50,000 are exempt from BPT. There have been proposals to reduce the BPT further, but these have not yet been enacted.
• Proposed Hospital Construction Tax Breaks: Legislation has been proposed to offer tax incentives for private developers to construct a new hospital, but details of these incentives are not yet finalized.

It's important to consult with tax professionals and the relevant Guam authorities for the most up-to-date information and specific requirements for each incentive program. Tax laws and regulations can change, and this information is current as of February 5, 2025.