This article presents a clear overview of the individual income tax system in Nicaragua as it stands in 2025. It focuses specifically on income tax rates, thresholds, and essential considerations for both residents and non-residents, based solely on the most recent official data.
Structure of Nicaragua’s Individual Income Tax
Nicaragua’s individual income tax is applied on a progressive basis, meaning tax rates increase with higher income brackets. The local currency is the Nicaraguan Córdoba (NIO).
Progressive Tax Brackets for 2025
The individual income tax is calculated based on total income within the following brackets for 2025:
| Income Range (NIO) | Rate (%) |
|---|---|
| ₱0 – ₱100,000 | 0% |
| ₱100,000 – ₱200,000 | 15% |
| ₱200,000 – ₱350,000 | 20% |
| ₱350,000 – ₱500,000 | 25% |
| ₱500,000 and above | 30% |
(Note: NIO 100,000 is approximately USD 2,740 at a rate of 1 USD = 36.5 NIO; USD conversions are provided for reference.)
If this article is useful to you, you're going to LOVE Stateless :
I've gathered all this data and much more to help you optimize your taxes and freedom.
Launching February 2026. Drop your email and I'll notify you.
— Félix
Important Features of the System
- Assessment Basis: Tax is assessed on total income. Progressive rates apply, increasing with the taxpayer’s earnings.
- No Base Tax on Lowest Bracket: Income up to ₱100,000 is not taxed, making this system moderately favorable for lower-income earners.
- Upper Bracket: Income above ₱500,000 (around USD 13,700) is subject to a 30% tax rate.
Surtax for Non-Residents
In addition to the main progressive system, Nicaragua imposes a surtax under specific circumstances:
| Category | Surtax Rate (%) | Condition |
|---|---|---|
| Non-residents | 20% | Applied to all non-residents, whether domiciled or not, who receive Nicaragua-source income |
This means non-residents earning income from Nicaraguan sources are typically subject to a flat 20% tax on that income. Residents follow the progressive bracket system above.
Additional Considerations
Nicaragua currently does not specify a minimum or maximum holding period relating to individual income tax, and there are no disclosed exemptions or deductions in the data presented here. If new regulations emerge, they are typically updated annually by local authorities.
Overview Table: Key Features
| Feature | Details |
|---|---|
| System Type | Progressive |
| Currency | NIO (Nicaraguan Córdoba) |
| Assessment Basis | Income |
| Non-Resident Surtax | 20% flat rate |
| Income Brackets | See table above |
Pro Tips for Navigating Individual Income Tax in Nicaragua
- Always verify your residency status, as it determines whether you follow the progressive resident rates or pay a flat 20% non-resident surtax on Nicaraguan-source income.
- If your income falls close to a bracket threshold, calculate the after-tax impact of salary increases or bonuses, as entering a higher bracket can raise your marginal tax rate.
- Document the source of all income streams clearly, especially if you earn both inside and outside Nicaragua, as only Nicaraguan-source income is subject to the non-resident surtax.
- For significant changes in personal or financial circumstances (relocation, extended stays, major investments), consult with a local tax specialist for up-to-date compliance requirements.
Official Resources
For authoritative details, including updates, forms, and additional explanations, refer to the official Nicaraguan government finance portal: https://www.mh.gob.ni.
To sum up, Nicaragua’s individual income tax regime for 2025 is defined by a progressive framework for residents and a straightforward surtax for non-residents with local income. Lower-income earners benefit from a 0% band, while high-income individuals or foreign earners should account for the top brackets and flat rates. Navigating this landscape is primarily a matter of understanding where your income fits within these thresholds and ensuring proper compliance based on your residency status and the source of your earnings.