How income tax works in Costa Rica
Costa Rica generally taxes income from Costa Rican sources. Salary, professional fees and business income connected to work performed in Costa Rica can be taxable even when the client or employer is outside the country.
Employees are taxed monthly on gross salary using five brackets. People carrying on a lucrative activity calculate annual net business income using a separate five-bracket scale.
Payroll contributions are separate from income tax. From January 2026, the standard employee contribution is 10.83% and the employer contribution is 26.83%, subject to the applicable base and employer circumstances.
Income tax brackets in Costa Rica
| Bracket | Rate | Notes |
|---|---|---|
| Monthly salary up to ₡918,000 | 0% | No salary tax under this threshold. |
| ₡918,000 - ₡1,347,000 per month | 10% | Applies to the excess over ₡918,000. |
| ₡1,347,000 - ₡2,364,000 per month | 15% | Progressive marginal bracket. |
| ₡2,364,000 - ₡4,727,000 per month | 20% | Progressive marginal bracket. |
| Over ₡4,727,000 per month | 25% | Highest 2026 salary bracket. |
| Annual individual business income up to ₡6,244,000 | 0% | Net income from a lucrative activity. |
| ₡6,244,000 - ₡8,329,000 per year | 10% | Applies to the excess over ₡6,244,000. |
| ₡8,329,000 - ₡10,414,000 per year | 15% | Progressive marginal bracket. |
| ₡10,414,000 - ₡20,872,000 per year | 20% | Progressive marginal bracket. |
| Over ₡20,872,000 per year | 25% | Highest 2026 business-income bracket. |
Tax rates at a glance
- Salary income tax
- 0% - 25%2026 rates
- Individual business income
- 0% - 25%
- Employee social charges
- 10.83%
- Employer social charges
- 26.83%
- Tax residence indicator
- 183+ days
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
EmployeesProfessionalsFreelancersExpats working locallyNearshore teams
Watch out for
- The 183-day residence indicator should not be read as a worldwide-tax rule. Costa Rica's ordinary income-tax base remains source-based.
- A remote worker performing the work from Costa Rica can create Costa Rican-source employment or professional income even when the hiring company is foreign.
- The 10.83% employee and 26.83% employer figures are standard 2026 reference totals. Minimum bases, INA applicability and the INS risk premium can change the actual calculation.
Frequently asked questions
Does Costa Rica tax foreign salaries?
Costa Rica generally looks at the source of the work. Salary for work performed in Costa Rica can be taxable even if the employer and bank account are abroad.
What is Costa Rica's income-tax rate?
The 2026 rate is progressive from 0% to 25%. Employees use monthly salary brackets, while individuals carrying on a lucrative activity use annual net-income brackets.
Do Costa Rican employees pay social security?
Yes. The standard 2026 employee contribution is 10.83% of the applicable salary base, in addition to income-tax withholding.