US taxes for Americans in Costa Rica

Front-loaded answerCosta Rica taxes only Costa Rican-source income, so your US pension, Social Security, investments, and remote salary aren't taxed locally. That removes most double-tax risk — but the US still taxes you on worldwide income every year, and with no US–Costa Rica treaty you lean entirely on the Foreign Earned Income Exclusion and Foreign Tax Credit.

Territorial tax — and the missing treaty

Under Costa Rica's territorial system, only income earned inside Costa Rica is taxed there. Foreign employment income, pensions, and investment income are exempt regardless of residency. The flip side is there's no income tax treaty with the US, so none of the treaty protections (Social Security exemptions, reduced withholding, dual-residency tie-breakers) apply.

• !FEIE (Form 2555) covers earned income only — up to $130,000 (2025) / $132,900 (2026); pensions and Social Security don't qualify
• !The Foreign Tax Credit (Form 1116) credits Costa Rican tax you pay — but if your income is all foreign-source, Costa Rica charges nothing to credit
• !Net effect for many retirees: Costa Rica takes nothing, the US taxes your pension as usual

FBAR, FATCA & the Caja

Opening a Costa Rican bank account triggers the usual US disclosures. Separately, as a resident you pay into the Caja (CCSS) — Costa Rica's social-security and health fund — based on your declared income; it's the price of mandatory public healthcare, not a tax the US credits.

Frequently asked

Will Costa Rica tax my US pension or Social Security?

No. Costa Rica's territorial system doesn't tax foreign-source income, so your US pension, Social Security, and investment income aren't taxed there. You still report and pay US tax on them as normal, since the FEIE doesn't cover pension income.