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 residency requirements, deduction allowances, and filing obligations for both employers and employees.

Costa Rica implemented significant tax reform in 2019 through the Fiscal Strengthening Law (Law No. 9635), which restructured brackets and rates effective January 1, 2019. Subsequent adjustments have been made annually to account for inflation, with brackets indexed to the Consumer Price Index. The 2024 brackets reflect these inflationary adjustments from the prior year.

Employers must withhold income tax from employee salaries according to the applicable bracket and remit withheld amounts monthly to the DGT. Employees earning multiple income sources must file annual tax returns reconciling total income against withheld amounts. Self-employed individuals and business owners must make quarterly estimated tax payments and file annual declarations. Accurate bracket application and timely remittance are essential to ensure compliance with Costa Rican tax obligations.