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 taxes employment income, business profits, investment returns, and other sources of income. 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. The 2024 adjustment increased the income thresholds compared to 2023, reflecting inflationary pressures. Additionally, Chile introduced a new solidarity tax in 2020 on high-income earners, which applies to annual income exceeding approximately CLP 14,000,000, with rates ranging from 0.5% to 3% depending on income level.

Employers and payroll teams must withhold income tax from employee salaries based on the applicable brackets and rates, remitting withheld amounts monthly to the SII. Accurate calculation requires tracking cumulative annual income to determine the correct marginal rate, as Chile uses a cumulative system. Annual tax returns (Formulario 1708) must be filed by April 30 each year, reconciling withheld amounts against final tax liability.