Feb 9, 2026
What changed, who is impacted, and what taxpayers should consider
For fiscal year 2026, monthly salaries up to USD 1,836 remain exempt from Income Tax. Amounts exceeding this threshold are taxed under a progressive marginal rate system, as shown below.
Monthly Income Tax Brackets – Salaried Employees (2026)
Monthly income (USD)* | Applicable rate |
Up to USD 1,836 | Exempt |
Over USD 1,836 and up to USD 2,704 | 10% |
Over USD 2,704 and up to USD 4,746 | 15% |
Over USD 4,746 and up to USD 9,490 | 20% |
Over USD 9,490 | 25% |
*Amounts converted at an illustrative exchange rate of ₡500 = USD 1.
This adjustment reflects changes in the Consumer Price Index (CPI) and aims to preserve the progressive nature of the tax system, preventing inflation-driven nominal salary increases from artificially increasing the effective tax burden.
Employees earning close to the taxable threshold may experience lower effective withholdings, while higher-income earners generally maintain a similar tax burden, adjusted for inflation.
Increase in the annual exemption for self-employed individuals
One of the most significant changes for 2026 is the increase in the annual exempt threshold for individuals engaged in business or professional activities (independent professionals, consultants, small traders, among others).
Previous annual exemption: USD 8,188
New 2026 annual exemption: USD 12,488
This change expands the portion of income not subject to tax, reducing the tax burden for small taxpayers and lower-scale economic activities. Self-employed individuals with moderate income levels may therefore see a reduction in income tax payable, provided their accounting records and tax filings are properly maintained.
Update to tax credits for family dependents
Monthly tax credits applicable to salaried employees were also updated:
USD 3.42 per month per child
USD 5.18 per month per spouse
These credits reduce the amount of income tax withheld through payroll, as long as dependents have been properly declared with the employer. From a public policy perspective, these adjustments seek to maintain tax progressivity without penalizing nominal wage growth.
The 2026 Income Tax tables represent a relevant technical adjustment, particularly for middle-income employees and self-employed individuals. While not a structural tax reform, the changes do have practical implications for withholding, tax planning, and personal cash flow, making it advisable for taxpayers and employers to review their calculations and ensure proper application.
Official references
Ministry of Finance – 2026 Income Tax Tables
Income Tax Law – Law No. 7092
https://www.pgrweb.go.cr/scij/
Tax Administration – Annual bracket updates
https://www.hacienda.go.cr/tributacion/
Central Bank of Costa Rica – Consumer Price Index (CPI)