The year 2026 does not begin with minor changes. It begins with two structural adjustments that directly impact the real labor cost, payroll, and financial planning of companies operating in Costa Rica: the increase in CCSS contributions and the update to Income Tax brackets.
Although these matters are often analyzed separately, in practice they operate together and generate a cumulative effect that many companies have not yet fully assessed.
1. Increase in CCSS Contributions: Labor Costs Continue to Rise
As of the payroll corresponding to January 1, 2026, employers in Costa Rica must apply a new adjustment to employee and employer social security contributions, as a result of the approved increase to the Disability, Old-Age, and Death Regime (IVM), administered by the Costa Rican Social Security Fund (CCSS).
This change is part of a gradual reform aimed at strengthening the sustainability of the pension system and has a direct, immediate, and mandatory impact on payroll cost structures.
What does the 2026 adjustment consist of?
The increase approved for 2026 applies exclusively to the IVM component, maintaining the tripartite contribution scheme (employee, employer, and State). However, as it is integrated into social security charges, it increases the total mandatory contribution percentage.
Total Employee Contribution (Employee Share)
| Institution / Concept | 2025 | 2026 |
|---|---|---|
| Health and Maternity Insurance (SEM) | 5.50% | 5.50% |
| Disability, Old Age, and Death (IVM) | 4.17% | 4.33% |
| CCSS Subtotal | 9.67% | 9.83% |
| Popular Bank (employee contribution) | 1.00% | 1.00% |
| Worker Protection Law Subtotal | 1.00% | 1.00% |
| TOTALS | 10.67% | 10.83% |
This increase results in a higher direct deduction from the employee’s salary, which must be properly reflected in the payslip.
Total Employer Contribution (Employer Share)
| Institution / Concept | 2025 | 2026 |
|---|---|---|
| Health and Maternity Insurance (SEM) | 9.25% | 9.25% |
| Disability, Old Age, and Death (IVM) | 5.42% | 5.58% |
| CCSS Subtotal | 14.67% | 14.83% |
| Popular Bank (employer contribution) | 0.25% | 0.25% |
| Family Allowances | 5.00% | 5.00% |
| IMAS | 0.50% | 0.50% |
| INA | 1.50% | 1.50% |
| Other Institutions Subtotal | 7.25% | 7.25% |
| Popular Bank (additional employer contribution) | 0.25% | 0.25% |
| Labor Capitalization Fund (FCL) | 1.50% | 1.50% |
| Complementary Pension Fund | 2.00% | 2.00% |
| INS (Occupational Risks)* | 1.00% | 1.00% |
| Worker Protection Law Subtotal | 4.75% | 4.75% |
| TOTALS | 26.67% | 26.83% |
* The INS percentage may vary depending on the employer’s economic activity.
The IVM increase raises the employer’s labor cost without any salary adjustment, increasing the real cost per employee.
2. New Income Tax Brackets for 2026
At the same time, 2026 brings an update to Income Tax brackets, expanding the tax base.
The result is clear: more people will pay income tax.
Salaried Employees (Monthly Income)
| Monthly Income (CRC) | Applicable Rate |
| Up to ₡918.000 | 0% (Exempt) |
| ₡918.001 – ₡1.347.000 | 10% |
| ₡1.347.001 – ₡2.364.000 | 15% |
| ₡2.364.000-₡4.727.000 | 20% |
| Over ₡4.727.000 | 25% |
Tax credits:
- ₡1,710 per child
- ₡2,590 per spouse
Direct impact on payroll withholdings and employees’ net salary.
Independent Workers (Annual Income)
| Annual Income (CRC) | Applicable Rate |
|---|---|
| Up to ₡6,244,000 | 0% (Exempt) |
| ₡6,244,001 – ₡8,329,000 | 10% |
| ₡8,329,001 – ₡10,414,000 | 15% |
| Over ₡20,872,000 | 25% |
Many independent workers who were previously exempt will now be required to file and pay income tax.
Small Businesses (Net Annual Income)
| Net Annual Income (CRC) | Applicable Rate |
|---|---|
| Up to ₡5,621,000 | 5% |
| ₡5,621,001 – ₡8,433,000 | 10% |
| ₡8,433,001 – ₡11,243,000 | 15% |
| Over ₡11,243,000 | 20% |
Without proper tax planning, the impact is reflected directly in cash flow and profitability.
3. The Most Common Mistake: Analyzing These Changes Separately
The real risk for 2026 does not lie in the isolated increase of a contribution or a tax, but in failing to understand their combined effect:
- Higher employer labor costs
- Lower net salary received by employees
- Adjustments in payroll withholdings
- Risk of discrepancies, retroactive adjustments, or contingencies
- Labor conflicts arising from poor financial communication
In other words, this is not just an accounting issue; it is a labor and strategic issue.
Is your company prepared for 2026?
At GLC Legal we support employers with:
- Comprehensive review of 2026 labor costs
- Payroll and withholding projections
- Preventive contractual and salary adjustments
- Compliance strategies for labor inspections
Because in 2026, compliance is not optional, but planning makes the difference.
Anticipating changes, reviewing processes, and validating calculations allow companies to absorb the impact in an orderly manner and avoid future contingencies.
Author: Yannsi Paniagua – Labor Department, GLC Legal
