Costa Rica tax deductions 2026: every credit you can legally claim

Last reviewed: November 2026 · Reviewed by Stéphane Gombauld, tax expert, technologist and digital nomad

You earn income in Costa Rica, as an employee or freelancer, and want to keep more of it legally. This guide lists every deduction and credit that applies in 2026, who can claim it, and where the real savings are.

Costa Rica personal deductions and benefits in 2026: the key figures

Is this guide for you?

Read on if you…

• are employed by a Costa Rican company and pay tax through payroll;
• run a freelance or business activity registered in Costa Rica;
• support a spouse or children and want the credits you're owed.

Probably not your case if you…

• earn only foreign income, which Costa Rica doesn't tax under its territorial system;
• hold the digital nomad status, whose foreign work income is already exempt.

Which deductions can employees claim?

Your employer withholds income tax from your salary each month. The rates rise in bands from 0% to 25%. Deductions here work mostly as tax credits – amounts taken straight off the tax, not off your income.

Family tax credits

• Per child: a fixed monthly credit for each minor child, or child in higher education, or child unable to work.
• For a spouse: a fixed monthly credit if your spouse depends on you. Only one spouse can claim it.

Tell your employer about your family situation. If you don't, the credit isn't applied. The amounts are updated by decree each year.

Aguinaldo and other exempt pay

The aguinaldo is the legally required 13th-month salary paid in December. It's exempt from income tax, up to one-twelfth of what you earned in the year.

Voluntary pension savings

Contributions to a voluntary pension plan (régimen voluntario de pensiones complementarias) are deductible up to 10% of your gross income. This comes from the Worker Protection Law (Ley 7983).

Honestly? For most employees, this is the only lever you control. The rest is fixed.

Which deductions can the self-employed claim?

If you run a lucrative activity – Hacienda's term for any registered business or freelance work – you pay tax on profit, not turnover. You file the annual D-101 return by 15 March.

Option 1: real expenses

You deduct the costs needed to earn your income. Typical ones:

• office rent or a share of your home used for work;
• equipment, software and depreciation;
• professional fees, insurance and training;
• CCSS contributions as a self-employed worker.

Here's the catch. Most expenses need a Costa Rican electronic invoice (factura electrónica) to be deductible. Paper receipts usually won't do. See business expenses in Costa Rica.

Option 2: the flat 25% deduction

Individuals providing professional services may instead deduct a flat 25% of gross income, without proof of expenses. It suits freelancers with low real costs. Compare both options before you file.

Family credits for the self-employed

The child and spouse credits also apply to the self-employed, as annual amounts against tax due.

What about investment income?

Since the 2019 reform (Ley 9635), capital income has its own flat schedule. No personal deductions or credits apply.

Residents and non-residents pay the same rates on Costa Rican-source capital income. There's no exit tax when you leave – see how to cease tax residency in Costa Rica.

Which other benefits apply to newcomers?

• Foreign income stays out. Costa Rica taxes only Costa Rican-source income. Foreign pensions, dividends and rents aren't taxed.
• Digital nomad exemption. Under Ley 10008, qualifying remote workers' foreign income is exempt, and work equipment enters duty-free.
• Pensionados and rentistas pay no Costa Rican tax on the foreign income that qualifies them.

More in tax incentives for expats and digital nomads in Costa Rica.

Common mistakes (and what they cost)

• Not telling your employer about children or a spouse → you lose the monthly credits for the whole year.
• Deducting expenses without electronic invoices → Hacienda rejects them, and you pay the tax back with interest.
• Never comparing real expenses with the flat 25% → you may overpay for years if your costs are low.
• Deducting costs from capital income → rent, dividends and gains are taxed flat; the deduction is disallowed.
• Declaring foreign income as local → you pay Costa Rican tax that the territorial system doesn't require.

Frequently asked questions

Can I deduct my children in Costa Rica?

Yes. You get a fixed tax credit per child: a minor, a child in higher education, or a child unable to work. Employees get it monthly through payroll once they inform their employer. The self-employed get an annual credit on the D-101 return. The amounts are updated by decree every year.

Is the aguinaldo taxed in Costa Rica?

No. The aguinaldo, the legal 13th-month salary paid in December, is exempt from income tax. It's calculated as one-twelfth of the salary you earned during the year. It's also exempt from CCSS social security contributions, so you receive the full amount.

Are pension contributions tax-deductible?

Voluntary contributions to a complementary pension plan are deductible up to 10% of your gross income. Mandatory CCSS and complementary pension contributions are a separate matter. For many employees, voluntary pension savings are the main way to reduce taxable income legally.

What is the 25% deduction for freelancers?

It's an option for individuals providing professional services. Instead of proving each expense, you deduct a flat 25% of gross income. It's useful when your real costs are lower than 25% of turnover. If your real costs are higher, deduct them with electronic invoices instead. Check the conditions before choosing.

Can I claim deductions against foreign income?

No, because foreign income isn't taxed in Costa Rica in the first place. Under the territorial system, deductions and credits only reduce tax on Costa Rican-source income. Expenses linked to foreign income aren't deductible either. Your home country may have its own rules if it still taxes you.

Do non-residents get personal deductions?

Generally no. Non-residents pay flat withholding taxes on Costa Rican-source income, such as 15% on dividends or 25% on service fees, without personal credits. Deductions and family credits are designed for resident employees and registered self-employed taxpayers who file in Costa Rica.

Related guides

• Business expenses in Costa Rica
• Tax incentives for expats and digital nomads in Costa Rica
• Capital gains tax in Costa Rica
• Costa Rica tax landscape overview
• Personal tax deductions in Paraguay
• Personal tax deductions in Mexico
• All country tax guides

Sources

• Ministerio de Hacienda de Costa Rica
• SCIJ – Sistema Costarricense de Información Jurídica (Ley 7092, Ley 9635, Ley 7983)
• Caja Costarricense de Seguro Social (CCSS)
• Ministerio de Trabajo y Seguridad Social (aguinaldo)
• PwC Worldwide Tax Summaries – Costa Rica, individual deductions

This guide is general information, not personalised tax advice. See how we research and review.