Guide · Living in Panama
Cost of Living in Panama: Expenses to Plan For
Cost of living in Panama for foreigners: housing, health insurance, electricity, transportation, food, schools and taxes, and how it changes by area.
- Updated
In short
The cost of living in Panama depends above all on where you live and your lifestyle. Panama City and areas with many foreigners are more expensive than the interior; housing, private health insurance and electricity are usually the biggest items. On the plus side are the dollar-based economy, moderate consumption taxes and the legal discounts for retirees.
Which expenses weigh the most?
- Housing: renting or buying is the largest expense, and it varies a lot between the capital, the beach and the mountains (see where to live in Panama and renting a home).
- Healthcare: if you do not pay into the Social Security Fund, you will need private health insurance, whose premium rises with age.
- Electricity: the heat means air conditioning drives up the bill on the coast; in the mountains you need much less.
- Transportation: outside the capital a car is almost essential, with its purchase, insurance and fuel.
- Food: local products are affordable; imported ones make the shopping basket more expensive.
- Schools: private and international schools are a major expense for families.
What makes living in Panama cheaper?
- The dollar-based economy: if you are paid in dollars, you lose nothing on exchange.
- A moderate consumption tax: the general ITBMS rate is 7 %.
- The territorial tax system: in general, your foreign-source income is not taxed in Panama.
- The legal discounts for retirees on transportation, leisure, restaurants and healthcare.
- The exemption to import household goods if you are a pensionado.
How do you calculate your budget?
- Choose one or two areas and look at real rents there.
- Get health insurance quotes for your age and health situation.
- Add utilities (electricity, water, internet, phone) and the maintenance fee if you live in a building.
- Add transportation, food and leisure according to your lifestyle.
- Set aside a margin for unexpected costs and trips home.
Frequently asked questions
Is Panama expensive to live in?
It depends on the area and your lifestyle. The capital and areas with many foreigners are more expensive; the interior is considerably cheaper. For many retirees, the legal discounts and the absence of tax on their foreign income make up for it.
How much money do I need for residency?
It depends on the option: for example, the Pensionado Visa requires a minimum pension and other options require an investment. The immigration overview and the guide to each residency summarize it.
Are there differences between the capital and the interior?
Yes, especially in housing and services. In exchange, the interior has fewer healthcare options and more dependence on a car (see where to live).