Costa Rica Tax Brackets | 2025 Updates
Starting January 1, 2025, Costa Rica introduces important updates to its income tax brackets and family tax credits. These changes, outlined in Executive Decree No. 44772-H and published in La Gaceta on December 4, 2024, will directly impact salaries, pensions, and retirement payments. To stay compliant and avoid any surprises, it’s essential to understand how these updates affect payroll and individual tax obligations.
New Income Tax Brackets for 2025
The updated tax brackets outline the rates applicable to monthly salaries, pensions, and retirement payments. Here’s the breakdown:
| Income From | Income To | Rate |
|---|---|---|
| CRC 0.0 | CRC 922,000.00 | 0% |
| CRC 922,000.00 | CRC 1,352,000.00 | 10% |
| CRC 1,352,000.00 | CRC 2,373,000.00 | 15% |
| CRC 2,373,000.00 | CRC 4,745,000.00 | 20% |
| CRC 4,745,000.00 | No upper limit | 25% |
For instance, if an individual’s monthly income is CRC 1,500,000, they will fall within the 15% tax bracket for the applicable portion of their earnings. Consequently, these updated rates make it vital to review payroll systems and ensure accurate deductions.
Updated Tax Credits for Dependents
In addition to tax brackets, Costa Rica has also updated family tax credits. These changes offer additional deductions for individuals with dependents, making it easier to reduce taxable income. According to the decree, the revised monthly tax credits are:
- Per child: CRC 1,720
- Per spouse: CRC 2,600
Employers and employees should ensure payroll systems are updated to incorporate these changes.
Implications for Employers and Individuals
Undoubtedly, these changes will affect payroll management and employee take-home pay. Employers must update their payroll systems to reflect the new brackets and credits accurately. Employees, on the other hand, should review their pay slips and tax obligations to ensure compliance.
Additionally, with the new tax brackets starting at CRC 922,000.00, some individuals who previously paid no taxes may now have taxable income. As a result, understanding these changes is crucial for avoiding penalties or errors in tax filings.
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Need Support?
For detailed guidance on implementing these updates, feel free to contact our experts or visit our Costa Rica Guide.
By staying informed about Costa Rica’s income tax updates for 2025, you can ensure compliance and optimize tax planning effectively.
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