What is ISSS in El Salvador?
The Instituto Salvadoreno del Seguro Social (ISSS) is El Salvador's social security institution responsible for providing healthcare and social benefits to formal sector workers. Established in 1954, enrollment is mandatory for all employees in a dependent work relationship.
Payroll Deductions in El Salvador
Every formal worker in El Salvador has three mandatory deductions from their salary:
1. ISSS (Social Security)
ISSS Employee = min(Salary, $1,000) x 3%
ISSS Employer = min(Salary, $1,000) x 7.5%
ISSS has a salary ceiling of $1,000 USD. If your salary exceeds $1,000, contributions are calculated only on the first $1,000. This means the maximum employee contribution is $30 and the employer's is $75 per month.
2. AFP (Pension)
AFP Employee = Salary x 7.25%
AFP Employer = Salary x 8.75%
Unlike ISSS, AFP contributions have no salary ceiling. They are calculated on the full salary without any limit.
3. ISR (Income Tax)
ISR is calculated on taxable income, which is salary minus ISSS and AFP deductions:
| Monthly Income Range | Rate | Fixed Amount | |---|---|---| | $0.01 - $472.00 | Exempt | $0 | | $472.01 - $895.24 | 10% | On excess over $472.00 | | $895.25 - $2,038.10 | 20% | $42.32 + excess over $895.24 | | Over $2,038.10 | 30% | $271.43 + excess over $2,038.10 |
Calculation Example
Monthly salary: $800 USD
- ISSS employee: $800 x 3% = $24.00
- AFP employee: $800 x 7.25% = $58.00
- Taxable income: $800 - $24 - $58 = $718.00
- ISR: ($718 - $472) x 10% = $24.60
- Total deductions: $24 + $58 + $24.60 = $106.60
- Net salary: $800 - $106.60 = $693.40
Employer cost:
- Salary: $800
- ISSS employer: $800 x 7.5% = $60
- AFP employer: $800 x 8.75% = $70
- Total: $930
ISSS Benefits
- General and specialized medical care
- Hospitalization
- Maternity benefits (16 weeks)
- Temporary disability due to illness
- Work accident coverage
- Cash benefits for illness
AFP Benefits
- Old age pension (at 60 for men, 55 for women)
- Disability pension
- Survivor's pension
- Balance refund if requirements are not met
El Salvador has used the US dollar as its official currency since 2001. All payroll calculations are done in USD.
Legal Framework
- ISSS: Social Security Law (Legislative Decree No. 1263)
- AFP: Pension Savings System Law (Decree No. 927)
- ISR: Income Tax Law
ISSS deducts 3% of the monthly salary, capped at a $1,000 USD ceiling. The maximum deduction is $30 per month.
The employer contributes 7.5% of the salary, capped at $1,000 USD. The maximum employer contribution is $75 per month.
The employee pays 7.25% and the employer contributes 8.75%. There is no salary ceiling for AFP.
ISR is calculated on salary minus ISSS and AFP deductions. The first $472 is exempt, then 10%, 20%, or 30% applies depending on the bracket.
The ISSS salary ceiling is $1,000 USD per month. If you earn more than $1,000, ISSS is only calculated on the first $1,000.
ISR applies when monthly taxable income (salary minus ISSS and AFP) exceeds $472.00.
Yes, El Salvador adopted the US dollar as legal tender in 2001 through the Monetary Integration Law. All salaries and deductions are handled in USD.