Ancient Ruins, Ghost Fleets & Living Pacific Traditions
There is no comprehensive progressive income tax. Employment income is taxed under the Wages and Salary Tax at 6% on the first $11,000 and 10% above that. There is no general tax on investment or passive income of the kind found in larger economies.
There is no national VAT or GST. Government revenue comes from the wages tax, the Gross Revenue Tax on businesses, import duties and Compact funding. Some states levy their own local taxes and fees.
Businesses pay the Gross Revenue Tax on turnover: exempt up to $2,000, a flat $80 on the first $10,000, and 3% on revenue above $10,000. Because it is charged on gross revenue rather than profit, low-margin businesses should model the effective rate carefully.
Yes. The Compact lets you live and work in the FSM, but it does not end U.S. tax obligations. You must file U.S. returns on worldwide income, using the Foreign Earned Income Exclusion and Foreign Tax Credit to reduce or eliminate U.S. tax on FSM earnings.
The FSM runs its own Social Security system funded by a 7.5% employer contribution and a 7.5% employee contribution, separate from the wages tax.
Only to a limited degree. Basic and some intermediate care is available at the state hospitals (Pohnpei is best-equipped), but complex surgery, advanced imaging and most specialties require referral abroad, typically to Guam, Hawaii or the Philippines.
Yes — both are strongly recommended. Local public care is inexpensive but limited, and serious cases require off-island evacuation that is very costly without coverage. Ensure your policy covers treatment in the likely referral destinations.
Pharmacies exist in the capitals, but supply of specific medications can be intermittent. Bring an adequate personal supply and copies of your prescriptions, and plan resupply logistics in advance.
Mosquito-borne illnesses such as dengue occur, so use repellent and reduce standing water. Non-communicable diseases (diabetes, hypertension) and tuberculosis are notable public-health issues. Complete vaccinations before arrival and treat or boil drinking water unless you know it is safe.
Not to get by — English is the official and common language of government and business, so you can function in English throughout. But each state has its own language (Chuukese, Pohnpeian, Yapese, Kosraean), and learning greetings and basics earns real goodwill and helps you integrate.
Imported goods and groceries are pricey and selection is limited, since almost everything arrives by ship. Local fish and produce are affordable, and some housing and services are modest, but expat-standard housing is scarce and commands a premium. Budget for a higher grocery bill than the U.S. mainland.
Submarine-cable links have improved connectivity on the main islands, but speeds and reliability lag big-economy standards and outer islands are poorly served. Expect periodic outages and test service at your specific location before relying on it for remote work.
Life centers on the ocean and the outdoors — diving, snorkeling, fishing and boating — plus church, family and community events. There is little nightlife or shopping, so those who love nature and community thrive while those seeking urban amenities feel the limits.
Yes. The FSM uses the U.S. dollar and U.S.-standard 120V power with U.S.-style plugs, so American appliances and cash work directly — one of the practical conveniences of relocating here.