A complete guide to taxes in Costa Rica for US expats (2026)
Americans in Costa Rica must still file a US tax return annually. Costa Rica taxes only locally sourced income – foreign income is fully exempt.
Key 2026 rates for taxes in Costa Rica: income tax up to 25%, IVA 13%, property tax 0.25%, WHT 8.5%–30%. If your income comes from abroad, Costa Rica won’t touch it – but the IRS still will.
Costa Rica tax at a glance
All values reflect 2026 rates per Executive Decree No. 45333-H (December 2025).
| Category | Details |
|---|---|
| Primary tax form | D-101 (self-employed) |
| Tax year | January 1 – December 31 |
| Tax due date | March 16 |
| Tax residency threshold | 183+ days per year |
| US filing requirement | Required – worldwide income |
| FEIE limit | $130,000 (TY2025) / $132,900 (TY2026) |
| Double tax relief | Form 1116 or Form 2555 |
| Income tax top rate | 25% |
| Corporate tax | 30% large / 5–20% small |
| IVA (VAT) | 13% |
| Property tax | 0.25% |
| WHT on dividends/interest | 15% |
| WHT on royalties | 25% |
| Estate tax | None in Costa Rica |
Resident vs. non-resident in Costa Rica
Understanding the distinction between resident and non-resident status in Costa Rica is fundamental for Costa Rica tax purposes. This classification significantly affects your tax liability and the nature of your tax obligations.
Costa Rica uses a territorial, source-based system – both residents and non-residents are taxed only on Costa Rican-source income. The key difference lies in how that income is taxed: residents are subject to progressive income tax rates (0–25%) and must file an annual D-101 return, while non-residents' Costa Rican-source income is taxed via withholding tax (WHT) at flat rates, withheld directly at source.
NOTE! The Costa Rican tax system is independent of immigration status. Therefore, even if you haven't obtained permanent residency in the immigration sense, you may still be considered a tax resident based on your presence in the country.
Who can be considered a resident?
You are a tax resident if you spend more than 183 days – continuous or discontinuous – in Costa Rica within a single fiscal year. Short trips outside the country do not reset the count.
If you are sporadically absent, you remain a tax resident unless you can prove residency in another country via an official tax certificate.
Costa Rica's territorial tax system
Costa Rica operates on a territorial tax system – only income earned within the country is taxed. So if your money comes from US Social Security, foreign rental properties, or overseas investments, Costa Rica tax on foreign income simply doesn't apply.
That said, the IRS still taxes US citizens on worldwide income regardless of where they live.
Digital nomad visa & tax implications
Costa Rica's digital nomad visa (Law 9996) allows remote workers earning foreign-source income to live in Costa Rica for two years, renewable for equal periods. As for Costa Rica's tax on foreign income for digital nomads, under the territorial system, none applies to foreign-source earnings.
Current Migración guidance lists a minimum income of $3,000/month, or $4,000/month if applying with dependents. The 25% no-receipt deduction is a separate rule that applies only to qualifying independent professionals, technicians, and certain agents.
Regardless of visa status, US citizens must still file a federal return annually. Costa Rican bank accounts remain reportable via FBAR if total balances exceed $10,000 – having a Costa Rica digital nomad visa doesn't change your US tax obligations in any way.
Types of taxes in Costa Rica
Costa Rica's tax system includes various forms of taxation, each with its own set of rules and Costa Rica tax rates. Understanding these is crucial for anyone earning income in the country, especially for Americans who are either considering relocating or already living there.
The primary focus here is on personal income tax, which applies to both self-employed and employed individuals.
Personal income tax
Costa Rica's personal income tax rates for 2026 range from 0% to 25%, adjusted annually for CPI. The Ministry of Finance applied a −0.38% adjustment for 2026 per Executive Decree No. 45333-H (December 2025).
Costa Rica income tax rates in 2026 follow a progressive structure – the more you earn, the higher the rate. These rates apply only to income earned in Costa Rica; foreign income isn't taxed.
Salaried employees – monthly brackets (2026):
| Taxable income (CRC) | Tax rate |
|---|---|
| 0 – 918,000 | 0% |
| 918,000 – 1,347,000 | 10% |
| 1,347,000 – 2,364,000 | 15% |
| 2,364,000 – 4,727,000 | 20% |
| 4,727,000 and above | 25% |
Self-employed – annual brackets (2026):
| Taxable income (CRC) | Tax rate |
|---|---|
| 0 – 6,244,000 | 0% |
| 6,244,000 – 8,329,000 | 10% |
| 8,329,000 – 10,414,000 | 15% |
| 10,414,000 – 20,872,000 | 20% |
| Over 20,872,000 | 25% |
Annual credits: CRC 20,520 per child, CRC 31,080 per spouse. These rates apply to net income – gross income less allowable deductions. From 2026, the 25% standard deduction without invoices (Law 10667) applies only to qualifying independent professionals, technicians, and agents who meet the legal requirements.
Withholding tax
Costa Rica WHT applies to payments made to non-residents. Rates vary by payment type – common rates are 8.5%, 15%, and 25% depending on the category. No WHT exemption applies based on residency status alone.
Withholding tax in Costa Rica is a critical component of the tax system, especially for non-residents and in certain transactions involving residents.
This tax is generally withheld at source from various types of income, such as interest, dividends, rent, royalties, and service fees. The payer of the income is responsible for withholding and remitting the tax to the tax authorities.
WHT rates vary depending on the type of income (2026):
| Type of income | WHT (%) |
|---|---|
| Interest | 15 |
| Dividends | 15 |
| Rent | 15 |
| Royalties, patents, trademarks, franchises, and formulas | 25 |
| Technical/personalized services | 25 |
| Services for transportation and communication | 8.5 |
| Other | 30 |
Source: Ministerio de Hacienda – hacienda.go.cr
Value-added tax (IVA)
Costa Rica's standard IVA rate remains 13% for 2026, unchanged. The tax applies to sales of goods and services, imports, and transfers of tangible and intangible goods.
Reduced rates apply only to specific goods and services: 4% for private health services, 2% for private education and certain medicines, and 1% for canasta básica and select agro/menstrual items. Exports, certain insurance, and select financial services are exempt.
Registered businesses file via form D-104, due the 15th of the following month; if that falls on a weekend or holiday, the next business day applies. Non-resident digital platforms must register for IVA or appoint a local withholding agent.
Property tax
Costa Rica's annual property tax (Impuesto sobre Bienes Inmuebles) is 0.25% of the registered cadastral value – one of the lowest rates in the region – payable quarterly to the local municipality.
US citizens have identical obligations to Costa Rican nationals; no special exemptions apply. The assessed value is based on self-declaration or municipal assessment, updated every five years.
Calculation example: A $200,000 property → ~$500/year → ~$125/quarter.
Payment schedule:
- March 31
- June 30
- September 30
- December 31
Late payment carries a penalty of 1% per month on the outstanding balance.
If you're wondering how much property taxes are in Costa Rica for high-value homes, a separate solidarity housing tax may also apply; check Hacienda's current 2025/2026 schedule for the latest thresholds and rates before filing.
Transfer tax on real estate
The real estate transfer tax is levied on the transfer of ownership of real estate in Costa Rica. This tax is an important consideration in the purchase and sale of real estate and affects both the buyer and the seller.
The real estate transfer tax is levied at a rate of 1.5% of the sale price of the property or its registered value, whichever is higher.
The responsibility for paying this tax usually falls on the buyer, but it may be subject to negotiation between the buyer and seller.
Payment of the transfer tax is required to legally record the change of ownership in the Public Registry.
Corporate income tax
Corporate income tax in Costa Rica is levied on the profits of corporations and other legal entities. This tax is an important part of the country's tax system and is relevant for companies operating within its jurisdiction, particularly when evaluating the overall Costa Rica tax rate burden.
Large companies (gross income > CRC 119,174,000) are subject to a flat rate of 30%.
Small companies (gross income ≤ CRC 119,174,000):
| Taxable income (CRC) | Tax rate |
|---|---|
| Up to 5,642,000 | 5% |
| 5,642,000–8,465,000 | 10% |
| 8,465,000–11,286,000 | 15% |
| Above 11,286,000 | 20% |
Corporate income tax is applied to a corporation's net income, which is defined as gross income less allowable deductions such as operating expenses, depreciation, and interest.
Corporations are required to file annual corporate income tax returns detailing their income, expenses, and resulting taxable profit.
Costa Rica offers special tax regimes for certain sectors, such as free trade zones, where companies can benefit from reduced tax rates or exemptions.
Filing requirements in Costa Rica
D-101 (annual income tax return) is due by March 16, covering the fiscal year January 1–December 31. Self-employed individuals file this form annually; employers withhold and remit tax directly for employees
D-104 (Costa Rica D-104 deadline: the 15th of the following month). If the Costa Rica tax deadline falls on a weekend or public holiday, the due date shifts to the next business day. For example, IVA for January 2026 is due February 16 – February 15 is a Sunday.
D-151 (summary of payments and withholdings): annual summary of clients, suppliers, and specific expenses, due on the last business day of February.
Costa Rica requires electronic filing through the tax administration's digital platform. Due to the complexity of local tax laws, many expats choose to work with a professional tax advisor to ensure accurate and timely filing.
Failure to file by the due date may result in penalties calculated as a percentage of unpaid tax, with interest accruing over time.
Pension system in Costa Rica (CCSS)
The pension system in Costa Rica is a key component of the broader social security framework designed to provide income security for individuals in their retirement years, making it an important consideration for Costa Rica retirement planning.
Costa Rica's pension system includes both a mandatory public pension system and voluntary private pension plans. The public pension is administered by the CCSS and is funded by contributions from employees, employers, and the government.
The standard retirement age in Costa Rica is 65 for both men and women. However, early retirement is possible under certain conditions.
To qualify for a full pension, individuals must contribute to the system for a minimum number of years. The amount of the pension depends on the individual's average salary and the total number of years contributed.
In addition to the mandatory state pension, individuals may choose to contribute to voluntary private pension plans, which offer the potential for higher returns and additional savings for retirement.
US – Costa Rica tax treaty
The United States and Costa Rica do not have a comprehensive bilateral income tax treaty. There are no treaty-based reductions of double taxation or preferential WHT rates between the two countries.
The absence of a US–Costa Rica tax treaty has practical consequences for American expats. There are no treaty exemptions on US Social Security payments, no reduced WHT rates for US residents in Costa Rica, and no tie-breaker residency rules to resolve dual-residency conflicts. US expats rely on unilateral mechanisms – Form 1116 (Foreign Tax Credit) or Form 2555 (FEIE) – to avoid double taxation.
Note that Costa Rica participates in CRS and FATCA information exchange with the US, but this does not constitute a full United States–Costa Rica income tax treaty.
US tax forms for expats in Costa Rica
Even while living abroad, US citizens must file a US tax return and report worldwide income. However, the US offers several tax benefits for expats:
- Foreign Earned Income Exclusion (FEIE) – Excludes foreign-earned income from US tax. The FEIE 2026 limits are: TY2025 (filed in 2026): $130,000 | TY2026 (filed in 2027): $132,900. The foreign earned income exclusion for Costa Rica residents applies if you meet the bona fide residence or physical presence test. To claim it, file Form 2555 with your US return.
- Foreign Tax Credit (FTC) – Credits taxes paid to Costa Rica against US tax obligations.
- Foreign Bank Account Reporting (FBAR) – Required for expats with foreign accounts exceeding $10,00
Costa Rican tax forms for US expats
In Costa Rica, US expatriates must also comply with local tax laws, which involve filing specific Costa Rican tax forms. Some of the most important forms include:
- D-101 (Income tax return for individuals): Expats with sources of income in Costa Rica, such as rental income or business income, must file this form annually. The deadline is March 16, covering the fiscal year January 1 – December 31
- D-104 (General sales tax return): For expats running a business in Costa Rica, this form is used to report and pay the sales tax collected from customers. Filing is monthly, due by the 15th of the following month. If that date falls on a weekend or public holiday, the due date shifts to the next business day.
- D-151 (Summary of payments and withholdings): This form is used to report an annual summary of clients, suppliers, and specific expenses. The deadline is the last business day of February.
- D-140 (Registration or update of taxpayer information): the RUT registration/update form used when a taxpayer needs to register or update their information with the tax authorities.
Conclusion
Managing taxes in Costa Rica as a US expat means navigating two separate systems at once. The territorial model keeps local obligations light for those with foreign income – but the US filing requirement never goes away.
A tax professional familiar with both jurisdictions helps you make full use of tools like the FEIE 2026 and the Foreign Tax Credit, while staying compliant on both sides.
FAQ
No. Under Costa Rica's territorial tax system, only income earned within Costa Rica is subject to local taxation. Foreign employment income, pensions, and investment income are fully exempt, regardless of residency status.
Costa Rica's income tax rates for 2026 range from 0% to 25%. The exempt threshold is CRC 918,000 per month for salaried workers and CRC 6,244,000 per year for the self-employed. The top rate of 25% applies to annual income above CRC 20,872,000, per Decree 45333-H.
Yes. All property owners – including US citizens – pay an annual property tax of 0.25% on the cadastral value, remitted quarterly to the local municipality. The same rate applies equally to foreign nationals and Costa Rican citizens.
No. The United States and Costa Rica do not have a bilateral income tax treaty. US expats may use the Foreign Tax Credit (Form 1116) or the Foreign Earned Income Exclusion (Form 2555) as unilateral mechanisms to avoid double taxation.
The standard IVA rate is 13%, unchanged for 2026. Reduced rates apply to specific goods and services: 4% for private health services, 2% for private education and certain medicines, and 1% for canasta básica and select agro/menstrual items.
Yes. US citizens and Green Card holders are required to file a federal tax return annually, regardless of where they reside. Holding a Costa Rica Digital Nomad Visa does not eliminate the US filing obligation.
For tax year 2025 (filed in 2026), the Foreign Earned Income Exclusion limit is $130,000. For tax year 2026 (filed in 2027), the limit increases to $132,900.
No. The Costa Rica Digital Nomad Visa does not alter US tax obligations in any way. US citizens must still file annually. The visa solely confirms that Costa Rica will not tax foreign-source income under its territorial tax system.
