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 taxed at 5%, 14%, 23%, 32%, and 35% depending on income level.

Income tax in Chile covers wages, salaries, professional fees, business profits, and investment returns. The tax is calculated on taxable income after permitted deductions, including contributions to mandatory pension funds (AFP), health insurance (FONASA or private), and unemployment insurance. Residents are taxed on worldwide income, while non-residents are taxed only on Chilean-source income.

The primary governing legislation is the Chilean Income Tax Law (Decreto Ley No. 824 de 1974) and its subsequent amendments, administered by the Internal Revenue Service (Servicio de Impuestos Internos, SII).

Chile's tax brackets are adjusted annually for inflation. The 2024 brackets represent an update from 2023 figures, with the adjustment typically announced by the SII in December of the preceding year. Employers must withhold income tax from employee salaries based on these brackets and remit withheld amounts monthly to the SII.

Payroll teams must ensure accurate calculation of taxable income, proper application of current-year brackets, timely withholding, and monthly reporting through the SII's electronic systems. Employees receive annual tax statements (Certificado de Retenciones) used for personal tax filing. Non-compliance with withholding obligations carries significant penalties.