U.S. Taxes for Americans Living in Costa Rica: The 2026 Guide

Key takeaways

• Americans living in Costa Rica generally still file a US return every year, because the United States taxes its citizens and green card holders on worldwide income.
• Costa Rica's income tax is, as a general rule, territorial: it reaches Costa Rican-source income, with a narrow statutory exception for certain foreign passive income of multinational-group entities.
• There is no US–Costa Rica income tax treaty and no totalization agreement, so double-tax relief comes only from US domestic rules and dual social security contributions cannot be eliminated by certificate.
• Accounts at Costa Rican banks count toward the FBAR and Form 8938 thresholds, and Costa Rica exchanges account data with the IRS under a FATCA agreement in force since 2019.
• A bill filed in September 2026 (expediente 25.796) would tax foreign passive income of all Costa Rican residents; it is not law as of this guide's verification date.

Do Americans living in Costa Rica still file US taxes?

Generally yes. The US taxes citizens and resident aliens (including green card holders) on worldwide income wherever they live, and moving to Costa Rica does not change that.

Filing thresholds. For tax year 2025, IRS Publication 501 sets the gross-income filing threshold at $15,750 for a single filer under 65, $31,500 for married filing jointly (both under 65) and $23,625 for head of household under 65. For married filing separately the threshold is $5, at any age. You also generally must file if you had net self-employment earnings of at least $400. The thresholds track the standard deduction, which is indexed annually; for 2026 it is $16,100 (single and MFS), $32,200 (MFJ) and $24,150 (head of household) under Rev. Proc. 2025-32.

Deadlines for tax year 2026. The regular due date is April 15, 2027. US citizens whose tax home and abode are outside the US on that date get an automatic two-month extension to file, to June 15, 2027. Filing Form 4868 extends the deadline to October 15, 2027. A further discretionary extension to December 15, 2027 is available by letter to the IRS explaining why you need it. Extensions apply to filing, not paying: interest runs from April 15 on any unpaid tax.

When does Costa Rica treat you as a tax resident, and what does it tax?

Residency test. The income tax law (Ley 7092, art. 2) makes "domiciled" individuals taxpayers regardless of nationality, with domicile determined at the close of each tax period. The current regulation, Decreto 43198-H (La Gaceta, Alcance 257, December 17, 2021), art. 10, treats an individual as domiciled if they stay in Costa Rica, continuously or not, for more than 183 days in the tax period. Days of entry and exit count; short trips abroad still count unless you show a foreign tax-residence certificate, while absences of more than 30 consecutive days do not. Migración's entry and exit records are the reference.

Tax residency is not immigration status. A pensionado or rentista card does not by itself make you tax-domiciled, and someone without any residence permit can be.

What is taxed. The charging provision, art. 1 of Ley 7092 as amended by Ley 10381 (in force October 2, 2023), taxes the receipt or accrual of income and limits Costa Rican-source income to income generated "exclusivamente en el territorio nacional." That supports the "territorial" label. The same article creates an exception: foreign-source dividends, interest, royalties, capital gains and other capital income are taxed when received by an entity that belongs to a multinational group and lacks adequate economic substance in Costa Rica (arts. 2 bis–2 quinquies). That exception targets entities, not individuals investing on their own account (the statutory text here was read from a law-firm copy of Ley 10381, worth confirming on the official SCIJ portal).

Pending change. In September 2026 the Executive filed expediente 25.796, which would tax foreign passive income (capital income and capital gains from assets located or used abroad) of all Costa Rican residents, individuals included, with foreign tax deducted from the base rather than credited. The Executive says territoriality would remain the general rule. A separate bill, expediente 25.734, takes a different approach, and the Ministry has announced a broader "global income" reform for 2027. None is law as of October 17, 2026 (based on news and law-firm reporting on the bills, not a direct read of their texts).

Rates for 2026 (Hacienda, Tramos de Renta 2026). Salaries are taxed monthly by withholding: exempt up to ₡918,000, then 10%, 15%, 20% and 25% in bands with thresholds at ₡1,347,000, ₡2,364,000 and ₡4,727,000. Individuals with business or professional activity are taxed annually: exempt up to ₡6,244,000, then 10%, 15%, 20% and 25% with thresholds at ₡8,329,000, ₡10,414,000 and ₡20,872,000 (the scale set by Ley 10667). Brackets are adjusted annually. Capital income, including interest and dividends paid to resident individuals, is generally taxed at 15% by withholding (Decreto 43198-H, art. 30), with lower rates for some cooperative and solidarista payments.

Tax year and filing. Since Ley 9635, the tax period is the calendar year. The annual return for the 2025 period was due March 16, 2026 (March 15 was not a business day) and is filed on the TRIBU-CR platform, which replaced ATV in October 2025. Whether an individual with only salary income must separately file a return is not clearly settled in the guidance available for this research.

Is there a US–Costa Rica tax treaty?

No. Costa Rica does not appear on the IRS list of US income tax treaties (page reviewed January 3, 2026). There is therefore no saving clause, no residence tie-breaker, and no treaty rate on pensions, dividends or interest.

What exists instead are information-exchange instruments, not tax-relief instruments. Treasury lists a Tax Information Exchange Agreement with Costa Rica dated May 23, 2018, which replaces a 1989 agreement; its exact entry-into-force date is worth confirming with Treasury. Treasury also lists a Model 1 FATCA intergovernmental agreement, signed November 26, 2013 and in force since July 8, 2019.

When US and Costa Rican tax both apply, relief comes only from US domestic law: the foreign tax credit or the exclusion.

How do you avoid paying tax twice?

Because Costa Rica generally does not tax foreign-source income, many retirees and investors pay little or no Costa Rican income tax, and the main question becomes how to reduce US tax on income earned in Costa Rica. For the general mechanics of the FEIE, the Foreign Tax Credit and the stacking rule outside Costa Rica-specific figures, see our guide on FEIE vs. Foreign Tax Credit.

Foreign Earned Income Exclusion (Form 2555). Excludes up to $132,900 of foreign earned income for 2026 ($130,000 for 2025), indexed annually, if you meet the bona fide residence or physical presence test. It covers wages and self-employment income, not pensions, dividends or rental income. It does not reduce US self-employment tax.

Foreign tax credit (Form 1116). Credits Costa Rican income tax against US tax on the same foreign-source income, by category (mainly general and passive). Unused credit can be carried back one year and forward ten. If your only foreign taxes are passive and total $300 or less ($600 joint), you may be able to skip Form 1116. You cannot claim a credit on income you have excluded.

When each tends to fit. If you pay Costa Rican tax at 20–25% on local wages, the credit may eliminate US tax on that income and build carryovers. If you pay little Costa Rican tax on earned income, the exclusion often produces the lower US bill.

CCSS contributions. Publication 514 bars credits for social security taxes paid to a country with which the US has a social security agreement. Costa Rica has none, so CCSS contributions may be creditable if they meet the foreign income tax definition; whether they do is genuinely unsettled and worth confirming with a preparer.

Timing. Both countries use the calendar year, so there is no year mismatch.

Social security: will you pay both?

There is no US–Costa Rica totalization agreement: Costa Rica is not on the SSA's list of agreements in force. This is a separate instrument from an income tax treaty.

Employees. A US citizen working abroad for an "American employer" generally remains subject to US Social Security and Medicare taxes. If the work is also covered by CCSS, both systems may apply, and no certificate of coverage exists to exempt you from either. CCSS rates rose on January 1, 2026: the pension (IVM) contribution is now 11.66% in total (employer 5.58%, employee 4.33%, State 1.75%), set to run to December 31, 2028. All-in, the employee share including health and Banco Popular is about 10.83% and the employer share about 26.83%.

Self-employed. US self-employment tax applies to net earnings of $400 or more, whether or not the income is excluded under the FEIE. Costa Rica separately requires independent workers to contribute to CCSS on a scale the CCSS board sets; recent reporting puts the combined rate at 7.05%–19.11% across five income bands. Dual contributions are a real cost for self-employed Americans in Costa Rica.

Residents who don't work. Under the Migration Law (Ley 8764, arts. 78–80), temporary and permanent residents, including pensionados and rentistas, must show CCSS affiliation to renew residence. The exact rate charged to them is worth confirming with CCSS.

US benefits. US citizens can receive Social Security payments while living in Costa Rica, and SSA mails a questionnaire every two years to beneficiaries there. Medicare generally does not pay for care outside the US. The Windfall Elimination Provision, which could reduce US benefits for people with a non-covered foreign pension, was repealed by the Social Security Fairness Act in January 2025.

Which US forms apply to accounts and assets in Costa Rica?

FBAR (FinCEN Form 114). Required if the aggregate value of your foreign financial accounts exceeded $10,000 at any time in the calendar year. It is filed electronically with FinCEN, not with your tax return, by April 15, with an automatic extension to October 15. The threshold is not indexed.

Form 8938. For taxpayers living abroad, required if specified foreign financial assets exceed $200,000 at year-end or $300,000 at any time (single or MFS), or $400,000 and $600,000 (MFJ). It is filed with Form 1040. Directly held real estate is not reportable; a Costa Rican company that holds it may be.

Banks. Under the FATCA agreement, Costa Rican banks identify US account holders and report them to the IRS through Costa Rica's tax authority, so expect to sign a Form W-9. Costa Rica also participates in the OECD Common Reporting Standard, with first exchanges by 2018. The EU removed Costa Rica from its list of non-cooperative jurisdictions in 2023 and from the watch list (Annex II) in February 2025.

Local pensions, retirement accounts and investment funds

Mandatory employee funds. Employees in Costa Rica participate in the ROP (mandatory supplementary pension) and the FCL (labor savings fund, withdrawable every five years) under Ley 7983, funded in part by employer contributions. Voluntary pension plans also exist.

US treatment. No treaty defers US tax on growth in these funds. Whether employer contributions and fund earnings are currently taxable in the US depends on facts such as vesting and fund structure, and no IRS guidance specific to Costa Rica settles it.

Trust reporting. Rev. Proc. 2020-17 exempts certain tax-favored foreign retirement trusts from Forms 3520 and 3520-A if conditions are met, including tax-favored status locally, annual information reporting to the local tax authority, and contribution limits of $50,000 a year or $1,000,000 lifetime from earned income. Whether the ROP or a voluntary plan qualifies has to be tested against each condition. FBAR and Form 8938 still apply.

Investment funds. Costa Rican investment funds (managed by SAFIs) are likely PFICs for US purposes, with Form 8621 reporting and punitive default taxation, though this should be confirmed fund by fund. For the full mechanics of the default regime and the available elections, see our guide on PFICs. US-domiciled funds avoid this, though some US brokers restrict accounts with non-US addresses.

Running a business or company in Costa Rica

Classification comes first. The Treasury regulations' per se corporation list includes "Costa Rica, Sociedad Anonima" (Treas. Reg. §301.7701-2(b)(8)). A Costa Rican S.A. is therefore always a corporation for US purposes and cannot elect otherwise. A Sociedad de Responsabilidad Limitada (S.R.L.) is not on the list. As an eligible entity whose members have limited liability, it defaults to corporate classification under §301.7701-3, but it can elect to be disregarded (one owner) or a partnership (several owners) on Form 8832.

CFC exposure. A foreign corporation more than 50% owned by US shareholders is a CFC. US owners generally file Form 5471 and may have to include Subpart F income and, for tax years beginning after December 31, 2025, net CFC tested income (NCTI, formerly GILTI), with a section 250 deduction of 40% available to corporate shareholders. A disregarded S.R.L. instead requires Form 8858; a partnership requires Form 8865.

Many Americans hold Costa Rican property through an S.A. or S.R.L. That structure can trigger Form 5471 or 8858 filing every year even if the company has no income. Costa Rica also levies an annual tax on companies (Ley 9428; for 2026, ₡69,330 for companies not registered in the tax registry and ₡115,550 or more for registered ones) and requires beneficial-owner reporting to the BCCR registry every April (Ley 9416), with fines for non-filing.

Self-employment. Sole proprietors register with Hacienda on TRIBU-CR, generally charge 13% IVA on services, and pay income tax on the business scale above. US self-employment tax applies in parallel.

Buying, renting and selling property

Buying. Transfer tax is 1.5% of the higher of the transaction value or registered value (Ley 6999). Annual municipal property tax is 0.25% of registered value (Ley 7509). Homes with a construction value above ₡143,000,000 also pay the impuesto solidario at 0.25%–0.55% for 2026.

Renting. Rental income is Costa Rican-source capital income, taxed at 15% after an automatic 15% deduction, for an effective 12.75%, reported monthly on form D-125. Landlords with at least one CCSS-registered employee can elect to be taxed as a business instead, for at least five years. Short-term stays of under a month also carry 13% IVA. On the US side, report the rent on Schedule E and credit the Costa Rican tax in the passive category.

Selling. Costa Rica taxes capital gains on real estate at 15%. For property acquired before July 1, 2019, sellers may elect, on the first sale, to pay 2.25% of the sale price instead. Sale of a domiciled person's habitual home is excluded (these rules were read from a 2025 Hacienda draft resolution citing Ley 7092 arts. 28 bis and 31 ter — worth confirming against the final adopted text). Non-domiciled sellers face 2.5% withholding of the price by the buyer. On the US side, the section 121 exclusion ($250,000 single, $500,000 joint) contains no location restriction in the statute or regulations, so it generally applies to a foreign main home that meets the ownership and use tests, though no IRS publication states this expressly for a foreign property.

Currency. If your mortgage is in colones rather than dollars, paying it off after the colón weakens can create a US currency gain. The regulations treat an individual's transaction under section 988 only if it is connected to business or investment (Treas. Reg. §1.988-1(a)(9)); how gain on a personal-residence loan is taxed is a genuinely open question and should be reviewed with a preparer.

Employment, equity compensation and remote work for a US employer

Source. For US tax, wages are sourced where you physically perform the work. Days worked in Costa Rica produce foreign earned income eligible for the FEIE, even if paid by a US company into a US account.

Costa Rica's view is unsettled. Under the territorial principle, work physically performed in Costa Rica can be argued to be Costa Rican-source wherever the employer is. Many expats assume remote work for a foreign employer is not taxed locally; Hacienda has not published a formal position on this specific point.

Digital nomads (Ley 10008). Remote workers with income of at least US$3,000 a month (US$4,000 with family) can obtain a one-year stay, renewable once, with a total exemption from Costa Rican income tax for the beneficiary (based on a law-firm copy of the law). It does not affect US tax.

Payroll. A US employer typically continues US withholding and FICA. If Costa Rica considers the employer to have a local presence, CCSS registration may also be required. Equity compensation (RSUs, options) is generally sourced for US purposes by workdays in each country over the vesting period; Costa Rica's treatment of equity awards for remote workers is not clearly settled.

Retirees under Ley 9996. Residents who qualified under Ley 9996 (pensioners US$1,000/month, rentistas US$2,500/month, investors US$150,000) get a 10-year income-tax exemption on the income declared to qualify, plus import benefits. The window to opt in reportedly closed in July 2026; whether it has since been extended is worth confirming with ICT.

State tax. Moving abroad does not automatically end US state tax residency — see our guide on state taxes after moving abroad.

Leaving Costa Rica

Costa Rica does not appear to impose an exit tax or departure tax clearance for individuals. On departure, close any TRIBU-CR business registration, settle municipal property taxes, and either dissolve any company or keep up its annual tax and beneficial-owner filings.

On the US side, leaving Costa Rica changes nothing unless you renounce citizenship or end long-term green card status, which can trigger the US expatriation tax — see our guide on the US exit tax. If you return to the US partway through a year, you may need to prorate the FEIE.

Mistakes Americans commonly make in Costa Rica

1. Assuming "territorial" means "no US return."
2. Forgetting the FBAR for Costa Rican accounts. A colón account plus a dollar account can cross $10,000 quickly.
3. Holding property in an S.A. without US filings. The S.A. is a per se corporation, so Form 5471 may be due every year.
4. Expecting a treaty to fix double tax. There is none.
5. Ignoring dual social security for self-employed work. US self-employment tax applies even when the FEIE wipes out income tax.
6. Investing in local funds without checking PFIC rules.
7. Not tracking days. Crossing 183 days makes you domiciled for Costa Rican tax, which matters if expediente 25.796 or a global-income law passes. If several years were missed, see our guide on the Streamlined Filing Compliance Procedures.
8. Treating a residence card as a tax ruling.

Checklist

Before moving: model FEIE versus foreign tax credit for your expected income; decide how you will hold property (directly or through an S.A./S.R.L.) and understand the US forms each choice triggers.

First 90 days: start a day count using your passport stamps and Migración records; register for CCSS as required by your residence category; if self-employed, register on TRIBU-CR before invoicing.

Every year: file Form 1040 (June 15 automatic deadline, or later with extensions), FBAR by April 15 (October 15 extended), and Form 8938 if applicable; file Forms 5471/8858/8865 for any Costa Rican entity; pay the annual corporate tax (January) and file the beneficial-owner report (April) for any Costa Rican company; check the status of expediente 25.796 and any global-income bill.

Before leaving: settle property taxes and decide whether to keep or dissolve any company; close TRIBU-CR business registration.

Frequently asked questions

Do I pay Costa Rican tax on my US Social Security or pension?

Under current law, foreign-source pensions are outside Costa Rica's territorial tax. Pending bills target passive capital income; whether any would reach pensions is not yet settled. US tax on these benefits still applies.

Does Costa Rica tax my US dividends and interest?

Not under current law for individuals investing on their own account. Expediente 25.796 would change this if enacted.

Is there a US–Costa Rica tax treaty?

No. There is an information-exchange agreement and a FATCA agreement, neither of which reduces tax.

Can I use the Foreign Earned Income Exclusion in Costa Rica?

Yes, on earned income, if you meet the bona fide residence or physical presence test. It does not cover pensions or investment income, or reduce self-employment tax.

Do I have to pay into CCSS as a retiree?

Residence holders generally must show CCSS affiliation to renew their status under the Migration Law.

Do I need to report my Costa Rican bank account to the IRS?

On the FBAR, if your foreign accounts together exceeded $10,000 at any time in the year; possibly also on Form 8938. Your bank also reports your account under FATCA.

When to hire a professional

• US return with a Costa Rican company, local funds or pensions: a US CPA or enrolled agent experienced with expatriate returns and Forms 5471/8621.
• Costa Rican filings, CCSS registration or rental tax: a Costa Rican contador público autorizado.
• Property purchase or sale, company formation or dissolution: a Costa Rican attorney and notary.
• Late FBARs or unfiled returns: a US tax attorney or CPA familiar with IRS compliance procedures — see our guide on the Streamlined Filing Compliance Procedures.
• Renouncing US citizenship: a US tax attorney before taking any step.

Sources

Source	URL	Used for	Page date
IRS — United States income tax treaties A to Z	https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z	No Costa Rica treaty	Reviewed 03-Jan-2026
IRS — Publication 54, 501, 514, 523	https://www.irs.gov/publications/p54	Filing rules, thresholds, credits, home sale	2025
IRS — Rev. Proc. 2025-32	https://www.irs.gov/pub/irs-drop/rp-25-32.pdf	2026 standard deduction, FEIE	2025
IRS — Rev. Proc. 2020-17	https://www.irs.gov/pub/irs-drop/rp-20-17.pdf	Foreign retirement trust exemption	2020
IRS — Costa Rica competent authority arrangement	https://www.irs.gov/pub/irs-lbi/costaricacompetentauthorityarrangement.pdf	FATCA competent authority arrangement	Accessed 17-Oct-2026
eCFR — 26 CFR §301.7701-2, §1.988-1, §1.121-1	https://www.ecfr.gov/current/title-26/chapter-I/subchapter-F/part-301/subpart-ElE7d9/section-301.7701-2	Per se list, currency gain, home sale	Accessed 17-Oct-2026
Treasury — FATCA and TIEA pages	https://home.treasury.gov/policy-issues/tax-policy/foreign-account-tax-compliance-act	Model 1 IGA, TIEA	Accessed 17-Oct-2026
SSA — Status of Totalization Agreements; Pub. 05-10137	https://www.ssa.gov/international/status.html	No totalization agreement; benefits abroad	Accessed 17-Oct-2026
Hacienda — Tramos de Renta 2026	https://www.hacienda.go.cr/docs/TramosRenta2026.pdf	2026 tax brackets	2026
La Gaceta — Decreto 43198-H (Alcance 257)	https://www.imprentanacional.go.cr/pub/2021/12/17/ALCA257_17_12_2021.pdf	Residency test, withholding rates	17-Dec-2021
La Gaceta — Ley 9635 (Alcance 202)	https://www.imprentanacional.go.cr/pub/2018/12/04/ALCA202_04_12_2018.pdf	Calendar tax year	04-Dec-2018
CCSS — IVM rate notice; Reglamento trabajador independiente	https://aissfa.ccss.sa.cr/arc/normativa/18/reglamento_trabajador_independiente.pdf	CCSS contribution rates	2026
ICT — Ley 9996 announcement	https://www.ict.go.cr/es/noticias-destacadas/1954-presidente-firma-ley-que-procura-atraer-inversionistas-rentistas-y-pensionados-al-pais.html	Retiree/investor exemption program	Accessed 17-Oct-2026
Council of the EU — press release	https://www.consilium.europa.eu/en/press/press-releases/2025/02/18/taxation-member-states-update-eu-list-of-non-cooperative-tax-jurisdictions/	Removal from EU watch list	18-Feb-2025
Law-firm copies (Ley 10381, 7092, 10667, 10008, 6999); La Nación; EY; Delfino.cr; Grupo Camacho (secondary)	—	Issue-spotting only: pending bills, filing deadlines, social-charge detail, corporate tax amounts	2025–2026

A note on scope: this guide is general information, not tax or legal advice. Whether a given fact pattern — a Costa Rican S.A., a local pension fund, a pending reform bill — triggers the rules described here depends on your own situation. Get advice from a US preparer experienced with Forms 1116, 5471, 8621 and 8938 and a Costa Rican contador público before you rely on anything in this guide.