Governor enacts law to make tax exemptions more flexible for nonprofits

Law 64-2025 makes the process for granting state tax exemptions to nonprofit organizations previously recognized by the Internal Revenue Service more flexible and streamlined.

By The Star Staff

Gov. Jenniffer González Colón signed Law 64-2025 on Thursday, which makes the process for granting state tax exemptions to nonprofit organizations previously recognized by the Internal Revenue Service more flexible and streamlined, thus harmonizing the local system with the federal system.

“Nonprofit organizations do extraordinary work addressing social, educational, cultural, and humanitarian needs, channeling resources to transform lives and communities,” González Colón said in a written statement. “With this new law, we are acting to support them and make their tax filing easier.”

Act 64-2025, approved by way of House Bill 498, amends Section 1101.01 of the Puerto Rico Internal Revenue Code of 2011. It authorizes the Treasury secretary to grant automatic state exemptions to federally recognized entities under Section 501(c)(3) if doing so serves the best public interest.

The legislation also extends favorable tax treatment to associations that manage residential or mixed-use properties. It also authorizes the Treasury Department to establish administrative procedures to expedite the processing of exemption applications.

Present during the signing were: Speaker of the House of Representatives Carlos “Johnny” Méndez Núñez, Senate President Thomas Rivera Schatz, Senate Finance Committee Chairwoman Migdalia Padilla Alvelo and House Finance Committee Chairman Eddie Charbonier Chinea. Representatives from SER de Puerto Rico, the Flamboyán Foundation, United Way Puerto Rico, the Titín Foundation, the Food Bank, Puerto Rico Philanthropy, the Youth Development Institute, and other faith-based organizations also attended.

The legislation fulfills a programmatic commitment of the González Colón administration and responds to complaints from the third sector about the bureaucratic burden of obtaining state exemptions, even when they already had federal exemptions in place.

The governor also signed into law measures 65-2025 and 66-2025, aimed at improving the tax system for employers and extending tax incentives for residential property rentals, respectively.