Guam tax: Complete guide for US citizens and expats (2026)

Quick answer:

• Guam operates a mirror tax system – the territory applies the US Internal Revenue Code with “Guam” substituted for “United States.”
• Bona fide residents file with the Guam Department of Revenue and Taxation, not the IRS.
• Guam imposes a Gross Receipts Tax on businesses in lieu of a traditional sales tax.

Bona fide residents file and pay Guam taxes to the Guam Department of Revenue and Taxation rather than to the IRS. Because the territory mirrors the federal tax code, the income tax brackets, standard deduction, and most credits are identical to what applies on the US mainland.

Guam is a US territory, not a state – there is no Guam state tax in the traditional sense, but the mirror code creates an equivalent income tax obligation.

All filing and payment go through the territory’s own tax and revenue agency – the Department of Revenue and Taxation.

This guide covers Guam income tax rates, the Gross Receipts Tax, property tax, filing requirements, and the rules that apply when US citizens or expats move to or from the island.

What is the Guam tax system and how does it relate to US federal tax?

Under the Organic Act of Guam – 48 USC § 1421i – the territory applies the US Internal Revenue Code with “Guam” substituted for “United States” and the Guam Department of Revenue and Taxation substituted for the IRS.

The Guam tax code mirrors the IRC almost word for word. When Congress changes the federal code, those changes generally flow through to Guam automatically.

Here are the key structural features of the mirror system:

• Same rates. Income tax brackets, capital gains rates, and the corporate rate are identical to federal figures.
• Same deductions and credits. The standard deduction, itemized deductions, and most credits available under the IRC carry over to the Guam return.
• Different collecting agency. All tax revenue goes to the Guam DRT rather than the IRS. Bona fide residents deal with one agency, not two.
• Automatic updates. When Congress amends the IRC, those changes generally apply in Guam without separate territorial legislation.

Guam tax laws are derived from the IRC – the territory does not draft its own income tax provisions from scratch.

This is the same mirror system used by the Commonwealth of the Northern Mariana Islands and the US Virgin Islands. American Samoa is different – it runs its own independent tax code, fixed to the version of the US Internal Revenue Code in effect on December 31, 2000, so it doesn’t update automatically when Congress changes federal tax law.

The mirror code has one practical consequence that surprises many taxpayers: Guam income tax rates are not lower than federal rates. They are identical. The advantage for bona fide residents is that all tax revenue stays in Guam, and residents file with only one agency instead of two.

Does Guam pay US federal taxes? The territorial tax relationship explained

Guam federal taxes are not paid to the IRS – they are paid to the Guam DRT under the mirror code. This is the key distinction between Guam and the 50 US states.

IRC Section 935 coordinates the tax relationship between the US and Guam. Under Section 935, bona fide Guam residents file their entire return – covering worldwide income – with the Guam DRT. They do not file a federal return with the IRS.

Here is how the filing obligation works in four common scenarios:

1. Bona fide resident with only Guam income. Files Form 1040 (the Guam Individual Income Tax Return) with the Guam DRT. No federal return with the IRS.
2. Bona fide resident with US-source income. Files Form 1040 (the Guam Individual Income Tax Return) with the Guam DRT reporting worldwide income, including US-source income. No IRS return needed.
3. US mainland resident with Guam-source income. Files Form 1040 with the IRS and Form 5074 to allocate a portion of the federal tax liability to the Guam DRT. Must file with both agencies.
4. Military member stationed in Guam. Generally retains home-state domicile under SCRA. Files with the IRS, not the Guam DRT, unless the member affirmatively establishes bona fide Guam residency.

US citizens with Guam-source income above the allocation thresholds – AGI of at least $50,000 and Guam-source income of at least $5,000 – must file Form 5074 with their federal return.

Guam income tax rates and brackets for tax year 2025

Because Guam mirrors the IRC, the same federal brackets apply. The Guam tax rate schedule mirrors the federal brackets exactly – from 10% to 37% for tax year 2025.

Single filers

 

Married filing jointly

 

Head of household

 

The standard deduction for tax year 2025 is $15,750 for single filers, $31,500 for married filing jointly, and $23,625 for head of household – identical to the federal amounts.

Guam income tax rates apply to your worldwide income if you are a bona fide resident. If you are not a bona fide resident but have Guam-source income, the rates apply only to the portion allocated through Form 5074.

Who must file a Guam tax return? Residency and filing requirements

Bona fide Guam residents file Form 1040 (the Guam Individual Income Tax Return) with the Guam Department of Revenue and Taxation instead of the IRS. A person is a bona fide Guam resident if they meet the three-prong test under IRC Section 937.

Here is the five-point checklist for determining your filing obligation:

• Presence. You must be physically present in Guam for at least 183 days during the tax year. An alternative path allows qualification with 549 days over three consecutive years, with a minimum of 60 days each year.
• Tax home. Your regular or principal place of business – or your regular place of abode if you have no regular business location – must be in Guam for the entire tax year.
• Closer connection. You must not have a closer connection to the United States or a foreign country than to Guam during any part of the tax year.
• Form 1040 (the Guam Individual Income Tax Return). Bona fide residents file this form with the Guam DRT covering worldwide income. The IRS receives nothing from you directly.
• Form 8898. If your worldwide income is $75,000 or more in the year you establish or end bona fide residence in a US territory, you must file this form with the IRS. The penalty for failing to file is $1,000.

You file your Guam income tax return using Form 1040 (the Guam Individual Income Tax Return) – the Guam equivalent of the federal Form 1040.

US citizens who are not bona fide Guam residents but who earn Guam-source income must file with both the IRS and the Guam DRT.

IRC Section 935 and the Guam mirror code: How the law actually works

Two IRC provisions govern the Guam tax relationship:

• Section 935. Filing coordination – determines where you file and pay. Bona fide residents file only with the Guam DRT.
• Section 937. Residency definition – establishes the three-prong test for bona fide residence: presence, tax home, and closer connection.

Important note:

Section 931. Income exclusion – this exclusion does not apply to Guam. It is only available for a “section 931 possession” – a possession that has entered into a separate implementing agreement with the United States. Guam has not entered into one and stays under the Section 935 mirror-code system instead. In practice, the Section 931 exclusion applies to American Samoa.

Guam Gross Receipts Tax (GRT): The business tax you need to know

Guam’s primary business-level tax is the Business Privilege Tax, commonly referred to as the Gross Receipts Tax. The Guam GRT is levied on the total gross receipts of businesses operating in the territory.

As of October 1, 2025, the BPT rate is 4.5% on gross business receipts – down from 5%,  and is scheduled to drop to 4% on October 1, 2026.

Here is what businesses operating in Guam need to know about the GRT:

• Who pays. Any business earning revenue in Guam, including retail, services, contracting, and real estate transactions.
• Current rate. 4.5% on gross receipts as of October 2025. This rate represents a rollback from the 5% emergency rate in effect since April 2018 under Guam Public Law 34-87.
• Small business rate. Businesses with gross annual income of at least $50,000 but not more than $500,000 pay a reduced rate of 3% on the first $500,000 of gross receipts. Businesses earning under $50,000 a year are fully exempt from the BPT.
• How it differs from sales tax. The BPT is imposed on the business itself based on total receipts, not collected from consumers at the point of sale.
• Upcoming change. The rate drops to 4% on October 1, 2026.

The BPT cost is typically passed through to consumers in the price of goods and services, even though the tax is imposed on the business.

Guam Business Privilege Tax and corporate income tax

The Guam corporate income tax mirrors the flat 21% federal rate set by the Tax Cuts and Jobs Act. Here are the key business tax obligations:

• Corporate income tax. 21% on net income, mirroring the federal rate. Corporations organized or doing business in Guam file their corporate return with the Guam DRT.
• Pass-through entities. Partnerships and S corporations pass income through to individual owners, who report it on their Guam Form 1040 (the Guam Individual Income Tax Return)
• BPT obligation. The Gross Receipts Tax at 4.5% on gross receipts is a separate obligation from the corporate income tax. The BPT is not a credit against corporate income tax.
• Filing calendar. Corporate returns follow the same calendar and format as federal corporate returns, with Guam-specific forms substituted for their IRS counterparts.

Does Guam have a sales tax? Understanding GRT vs sales tax

There is no traditional sales tax in Guam – instead, the territory collects the Business Privilege Tax on business gross receipts.

The difference matters. Here is how the two compare:

• Traditional sales tax. Collected at the point of sale from the consumer by the retailer. Appears as a separate line item on receipts. Varies by state – typically 4% to 10%.
• Guam BPT/GRT. Imposed on the business based on total gross receipts. Remitted directly to the Guam DRT by the business. Does not appear as a separate line item on consumer receipts. Currently 4.5% standard, 3% for small businesses.

Because the BPT is a tax on the business rather than a point-of-sale tax, consumers absorb it indirectly through higher prices rather than seeing it itemized.

Guam’s mirror code creates unique filing rules.

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Guam property tax: Rates, assessments, and payment

The real property tax in Guam is administered by the Department of Revenue and Taxation. Guam property tax rates are based on a percentage of assessed value, with different rates for land and improvements.

Guam property tax rates are low compared to US mainland averages – a home appraised at $300,000 (assessed value $270,000) would owe roughly $260 to $1,050 annually, depending on the land-to-improvement value split, with most homes falling toward the higher end since assessed value is typically weighted more toward the improvement (building) than the land.

Here is how the assessment and payment process works:

• Land rate. 7/72 of 1% of assessed value per year, per 11 GCA § 24103 – about 0.097% annually.
• Improvement rate. 7/18 of 1% of assessed value per year, per 11 GCA § 24103 – about 0.389% annually.
• Assessment basis. Assessed value equals 90% of appraised fair market value – not 100%. This reduces the effective tax rate below the statutory rate.
• Homeowner exemption. $50,000 deducted from assessed value for owner-occupied primary residences.
• Senior citizen discount. Residents aged 55 or older who are heads of household, own and occupy the home as their primary residence, and have lived on Guam for the preceding 5 consecutive years pay 20% of the normal property tax amount.
• Veterans rated 100% disabled (or individually unemployable) by the VA, and Gold Star spouses/parents. Fully exempt from real property tax on their primary residence.
• High-value improvement surtax. Improvements valued at $1,000,000 or more are subject to an additional 7/18 of 1% levy on top of the standard improvement rate.

Guam property tax payment is due in two installments, per 11 GCA § 24612 – the first half by February 21, the second half by April 21.

That effective rate is well below the US national average of roughly 1.1%.

Non-bona-fide residents who file a federal return can deduct Guam property taxes. For tax year 2025, the SALT deduction is capped at $40,000 ($20,000 if married filing separately), phasing down to $10,000 ($5,000 if married filing separately) once modified adjusted gross income exceeds $500,000 ($250,000 if married filing separately).

Guam capital gains tax: What investors need to know

Because Guam mirrors the IRC, capital gains are taxed under the same framework as US federal law. Guam residents report capital gains on their Guam return – Form 1040 (the Guam Individual Income Tax Return) – rather than the federal Form 1040.

Guam capital gains tax rates mirror federal rates – long-term gains are taxed at 0%, 15%, or 20% depending on your taxable income for tax year 2025.

Key points for investors:

• Short-term gains. Assets held one year or less are taxed as ordinary income at your marginal Guam income tax rate.
• Long-term gains. Assets held longer than one year qualify for preferential rates of 0%, 15%, or 20% depending on income level.
• Net investment income tax. Per IRS Publication 570, because bona fide Guam residents generally don’t file a federal return, the NIIT doesn’t directly apply to them the way it does on the mainland. Whether and how the Guam DRT mirrors the 3.8% NIIT is a question to confirm with the Guam DRT, not something the IRC settles on its own.

US citizens selling capital assets such as foreign property while residing in Guam report the gain on the Guam return, not the federal return.

Moving to Guam: How your US tax obligations change

When a US citizen establishes bona fide residency in Guam, their filing obligation shifts from the IRS to the Guam DRT. The year of the move is the most complex tax year – you may owe both a partial-year US federal return and a partial-year Guam return.

You must determine the exact date your bona fide residency began. Income earned before that date is reported to the IRS. Income earned after is reported to the Guam DRT. Getting the split-year allocation wrong is one of the most common errors TFX sees in territorial filing.

Moving away from Guam: Ending Guam tax residency

When a bona fide Guam resident moves back to the US mainland or abroad, they must wind down their Guam filing obligation. Here is the checklist:

• Determine the residency-ending date. File a final Guam return covering income through that date.
• File Form 8898 with the IRS to notify them of the residency change if worldwide income meets the $75,000 threshold.
• Start your new filing obligation. Any income earned after leaving Guam is reported to the IRS on Form 1040.
• Watch for state tax. If you relocate to a US state with income tax, your state filing date generally starts on the date you establish domicile there.

US military personnel stationed in Guam: Special tax rules

US military members stationed in Guam generally do not become bona fide Guam residents for tax purposes. Here are the key rules:

• SCRA protection. Under the Servicemembers Civil Relief Act, active-duty members retain their home-state domicile. Military pay earned in Guam is not subject to Guam income tax for non-resident service members. They continue to file with the IRS using their home state of legal residence.
• Military spouse election. Under the Military Spouses Residency Relief Act, spouses can elect the service member’s state of domicile. This election means the spouse’s earned income is also excluded from Guam income tax.
• Non-military income. Income earned by a service member or spouse from Guam sources – such as rental income from a Guam property or a side business – may still be subject to Guam income tax depending on the income source.

Guam tax filing deadlines and forms for tax year 2025

Guam tax filing follows the same calendar as federal returns – April 15 for individual returns, with an automatic extension to October 15.

 

Quarterly estimated tax payments follow the standard federal schedule: April 15, June 15, September 15, and January 15 of the following year. Bona fide Guam residents make estimated payments to the Guam DRT rather than the IRS.

Is Guam a tax haven? The reality behind the myth

Guam is not a tax haven. Its income tax rates are identical to US federal rates – 10% to 37% – because of the mirror code. There is no special low-rate regime for individual income.

The territory does offer targeted business incentives through the Guam Economic Development Authority. Here are the legitimate incentive programs available:

• Qualifying Certificate Program. Tax abatements for businesses that create jobs and invest in the territory. Requires GEDA board approval and ongoing compliance.
• No state income tax. Unlike the US mainland, there is no state-level income tax layered on top of the federal-equivalent rate – a genuine advantage over high-tax states.
• Foreign sales corporation provisions. Historically used for export-related tax benefits, though their scope has narrowed.

The confusion may stem from the fact that Guam has no state income tax. A Guam resident pays only the mirrored federal rate to the Guam DRT – there is no additional 5% to 13% state tax as there would be in California, New York, or other high-tax states.

This makes Guam comparable to states like Texas or Florida, not to offshore tax havens.

Guam vs US mainland vs other territories: Tax comparison

Among US territories, Guam uses a near-identical mirror of the full US Internal Revenue Code. Puerto Rico has its own independent tax system, and American Samoa also runs an independent code, fixed to the IRC as it stood on December 31, 2000. The USVI uses a mirror code with local modifications.

 

The practical difference for individual taxpayers is that Guam residents avoid state income tax entirely – an advantage of 5% to 13% over residents of high-tax US states – while paying the same federal-equivalent rates.

Puerto Rico stands apart with lower individual income tax rates but a separate, complex tax code and a much higher consumption tax.

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Foreign Earned Income Exclusion and Guam: Does it apply?

The Foreign Earned Income Exclusion under IRC Section 911 does not apply to income earned in Guam. Guam is a US territory, not a foreign country – the $130,000 FEIE exclusion (2025) is available only for income earned in a foreign country by a qualifying individual.

Guam residents cannot use Form 2555 to exclude Guam-source income. This is one of the most common misconceptions TFX encounters with territorial tax clients.

Here is what IS available instead:

• Section 935 coordination. Bona fide Guam residents pay income tax only to the Guam DRT, not the IRS. There is no double taxation on Guam income, so no exclusion is needed.
• Foreign Tax Credit. If you earn income in a foreign country while living in Guam, the FTC or FEIE may apply to that foreign income – but not to Guam-source income.

The mirror code achieves a functionally similar result to the FEIE: no double taxation. The mechanism is filing coordination rather than an income exclusion.

Guam tax for US expats living abroad: When Guam income meets foreign income

A US citizen who previously lived in Guam and now lives abroad may have residual Guam-source income – rental income from a Guam property, income from a Guam business, or retirement distributions from a Guam employer. This creates a three-way filing situation.

Here is how a common TFX client scenario works – a former Guam resident now living in Japan earns $80,000 in salary, $15,000 in Guam rental income, and $5,000 in US-source investment income:

1. Guam rental income. Reported to the Guam DRT. Guam-source income does not qualify for the FEIE because Guam is a US territory, not a foreign country.
2. Japanese salary. Reported on the federal return. May qualify for the FEIE because Japan is a foreign country.
3. US-source investment income. Reported on the federal return. Does not qualify for the FEIE.
4. Coordination. Form 5074 allocates the Guam portion. The federal return covers the rest. The Japan return covers local obligations.

Filing a Guam return from overseas?

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Common Guam tax mistakes and how to avoid them

These are the errors TFX sees most often from Guam-related tax clients:

1. Filing with the IRS instead of the Guam DRT. Bona fide Guam residents should file Form 1040 (the Guam Individual Income Tax Return) with the Guam DRT – not a standard IRS Form 1040.
2. Claiming the FEIE on Guam income. Guam is a US territory, not a foreign country. IRC Section 911 does not apply to Guam-source income.
3. Missing the Guam DRT registration. US citizens who move to Guam must register with the Guam DRT. Simply stopping your IRS filings without establishing a Guam filing history creates a gap that both agencies may flag.
4. Using Form 8689 instead of Form 5074. Form 8689 is for the USVI. Guam and CNMI use Form 5074. Filing the wrong form delays processing and may trigger IRS notices.
5. Failing to file a split-year return when moving. The year you move to or from Guam requires careful allocation between the IRS and the Guam DRT. Skipping the split-year filing or failing to file Form 8898 creates compliance issues with both agencies.

Working with a Guam tax preparer who understands the mirror code and dual-filing rules can prevent these errors. TFX has prepared Guam tax returns for US citizens and expats across the globe – the territorial rules require specialized knowledge that most generalist preparers do not have.

TFX can help you catch up through Streamlined Filing Procedures and Guam DRT coordination.

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