Income tax (rates / brackets)

Costa Rica's income tax system applies progressive rates to resident individuals and non-residents earning Costa Rican-source income. The current tax brackets for 2024 range from 0% on income below ₡863,000 monthly to 25% on income exceeding ₡8,630,000 monthly, with intermediate rates of 10%, 12%, and 17% applied to successive income bands. These rates apply to employment income, business profits, rental income, and other sources of taxable revenue.

The income tax regime is governed by the Income Tax Law (Ley de Impuesto sobre la Renta, Law No. 7092 of 1988) and administered by the Tax Administration (Dirección General de Tributación, DGT). The law establishes that residents are taxed on worldwide income, while non-residents are taxed only on Costa Rican-source income. Certain income categories, including social security benefits and some investment returns, receive preferential treatment or exemptions.

The tax brackets are adjusted annually for inflation. The 2024 brackets represent the most recent statutory adjustment, with the DGT publishing updated thresholds each January to reflect cost-of-living changes. Employers must withhold income tax from employee salaries based on these brackets and remit withheld amounts monthly to the DGT.

Payroll teams must calculate employee tax liability using the correct bracket for each pay period, maintain detailed withholding records, and file monthly tax returns (Declaración Jurada Mensual) by the fifteenth of the following month. Non-compliance with withholding obligations or filing deadlines can result in penalties and interest charges assessed by the DGT.