Introduction
March is an important month for several tax obligations in Costa Rica. One of the most relevant is the income tax, which applies to both individuals and companies depending on their level of income.
Understanding how this tax works and the applicable tax brackets for the 2026 fiscal period can help avoid mistakes, incorrect payments, or administrative penalties.
Below we explain the key points you should know.
What is income tax in Costa Rica?
The income tax is a tax applied to income earned by individuals and companies in Costa Rica.
It operates under a progressive system, meaning the tax rate increases as income rises. In other words, taxpayers do not all pay the same percentage; the applicable rate depends on specific income brackets.
How is income tax calculated for employees?
For employees, retirees, and pensioners, income tax is calculated based on gross monthly salary.
For the 2026 fiscal period, the main brackets are:
- Up to ₡918,000 per month → exempt
- From ₡918,000 to ₡1,347,000 → 10%
- From ₡1,347,000 to ₡2,364,000 → 15%
- From ₡2,364,000 to ₡4,727,000 → 20%
- Above ₡4,727,000 → 25%
The percentage is applied only to the portion of income exceeding each bracket, not the entire salary.
What about self-employed individuals?
Self-employed individuals or professionals with business activities pay income tax on their annual net income.
For the 2026 fiscal period, the brackets include:
- Up to ₡6,244,000 annually → exempt
- From ₡6,244,000 to ₡8,329,000 → 10%
- From ₡8,329,000 to ₡10,414,000 → 15%
- From ₡10,414,000 to ₡20,872,000 → 20%
- Above ₡20,872,000 → 25%
Net income is calculated by subtracting deductible expenses from total income earned during the fiscal year.
Are tax credits available?
Yes. Certain taxpayers may apply tax credits that reduce the final tax amount, including:
- credit for children
- credit for spouse
These credits are deducted directly from the calculated tax.
Another upcoming obligation: Education and Culture Stamp
Companies in Costa Rica should also be aware that March 31 is the deadline to pay the Education and Culture Stamp (TEC), an annual tax applicable to companies registered in the Public Registry.
Next week we will share a detailed guide explaining:
- who must pay it
- how the amount is calculated
- how to complete the payment correctly.
Need legal guidance?
At ERP Lawyers & Associates, we assist individuals and companies with legal and tax compliance in Costa Rica.
Our team can help you review your tax obligations and ensure everything is handled properly.
📩 Contact us now to receive personalized guidance on tax compliance in Costa Rica.
