Income tax (rates / brackets)

Chile's income tax system applies progressive rates to resident individuals and certain non-residents earning Chilean-source income. The current tax brackets for 2024 range from 0% on income below approximately CLP 1,657,920 monthly to a top marginal rate of 37% on income exceeding CLP 3,315,840 monthly, with intermediate brackets at 4%, 8%, 13.5%, 23%, and 32%.

Income tax in Chile is governed by the Income Tax Law (Decreto Ley No. 824 of 1974) and administered by the Internal Revenue Service (Servicio de Impuestos Internos, SII). The system distinguishes between different income categories—employment income, business income, investment income, and capital gains—each subject to specific rules and rates. Residents are taxed on worldwide income, while non-residents are taxed only on Chilean-source income.

Chile's tax brackets are adjusted annually for inflation using the Unidad de Fomento (UF), a unit of account that reflects changes in the Consumer Price Index. This annual adjustment ensures that bracket creep does not artificially push taxpayers into higher rates. The most recent significant reform occurred in 2020, which introduced changes to corporate tax rates and individual taxation structures, though marginal rates for individuals have remained relatively stable since then.

Employers and payroll teams must withhold income tax from employee salaries based on the applicable bracket for each pay period, remitting withheld amounts to the SII monthly. Accurate calculation requires tracking cumulative income year-to-date and applying the correct marginal rate. Annual tax returns (Formulario 1708) must be filed by April 30 to reconcile actual tax liability with amounts withheld during the year.