This article provides detailed, practical information on the structure of individual income tax in Costa Rica for 2025. All statistics and explanations are based strictly on the latest available official data.
Overview of the Individual Income Tax Framework
Costa Rica applies a progressive individual income tax system. Taxation is based on total income within the calendar year, using tiers that increase as income rises. Income is assessed in Costa Rican colón (CRC), and for clarity, approximate USD conversions are included in brackets using a rate of 540 CRC = 1 USD.
Progressive Tax Brackets for 2025
The following table summarizes Costa Rica’s individual income tax brackets for 2025. The rates apply to total annual taxable income after deductions:
| Income Range (CRC) | Income Range (USD) | Tax Rate (%) |
|---|---|---|
| ₡0 – ₡4,094,000 | $0 – $7,582 | 0% |
| ₡4,094,001 – ₡6,115,000 | $7,582 – $11,328 | 10% |
| ₡6,115,001 – ₡10,200,000 | $11,328 – $18,889 | 15% |
| ₡10,200,001 – ₡20,442,000 | $18,889 – $37,852 | 20% |
| ₡20,442,001 and above | $37,852 and above | 25% |
In summary, the first ₡4,094,000 (approximately $7,582) of income per year is tax-exempt. Subsequent portions are taxed at progressively higher rates, with any annual income above ₡20,442,000 (about $37,852) subject to the top marginal rate of 25%.
Additional Surtaxes on Capital Income
Certain types of income, such as capital gains, investments, and property transactions, are subject to distinct tax treatment in Costa Rica. The following table outlines the current applicable surtaxes:
| Income Type/Transaction | Applicable Rate (%) | Details / Condition |
|---|---|---|
| Capital gains, interest, rental income | 15% | Standard rate for these categories |
| First sale of each asset (under certain conditions) | 2.25% | Applies to capital gains meeting special criteria |
| Sale of assets by non-residents | 2.5% | Withheld by buyer at transaction |
Please note that the primary individual income brackets apply to standard earned income, but different rates will apply if your income includes capital gains, investment interest, or rental income. The specific 2.25% and 2.5% rates are directed at asset sales under defined circumstances.
Assessment Basis and General Tax Calculation
Costa Rica’s income tax is calculated on a calendar-year basis, assessing an individual’s total gross income for the year (minus any applicable deductions). The tax system is progressive, meaning higher levels of income attract higher marginal rates, as shown above. Official figures for certain deductions, personal allowances, or credits are not included here due to unavailability in the current extracted data.
Capital Gains and Special Regimes
For individuals with significant investment or property income, the special surtax rates can be material. The standard capital gains, interest, and rental income rate is 15%. For first sales of assets under certain qualifying conditions, a reduced 2.25% is levied; for sales of assets owned by non-residents, 2.5% is withheld by the buyer. Specific thresholds, reporting obligations, and exemptions may apply, but these details are not provided in the extracted data.
Pro Tips for Managing Costa Rican Income Tax
- Keep meticulous records of all income and capital transactions throughout the year to facilitate correct bracket application and meet compliance requirements.
- If earning capital gains or rental income, review each transaction for possible preferential rate eligibility and proper withholding procedures, especially for non-resident transactions.
- Plan major asset sales or events carefully—timing and structuring can make a material difference given the differing capital gains and standard income tax rates.
- Be aware that tax rates and brackets are periodically updated by Costa Rican authorities; always verify with the latest official guidance before making decisions. Consult the Costa Rican Ministry of Finance for official policies and updates.
Key Points to Remember
Costa Rica’s individual income tax system for 2025 is structured as a progressive framework, with five clear income brackets and distinct rates for capital income and certain transactions. Anyone anticipating multiple sources of income, especially from capital gains or cross-border asset sales, will benefit from understanding when and how the separate surtax regimes apply. Always consult primary official resources and professional advisors to ensure compliance, particularly as regulations can evolve. The information summarized above should support confident, data-driven planning for anyone considering Costa Rica for personal or business relocation.