Do US citizens living in Costa Rica pay taxes?

Yes, US citizens living in Costa Rica owe taxes in both jurisdictions, though the structures are different. The US taxes citizens on worldwide income regardless of where they live, so Americans in Costa Rica still file US returns. The Foreign Earned Income Exclusion (around $130,000 for 2026) and the Foreign Tax Credit can significantly reduce or eliminate US tax owed. Costa Rica taxes residents only on Costa Rica-sourced income, which is favorable for retirees living off US Social Security or pensions because that foreign-sourced income is generally not taxed locally. There is also a Costa Rican sales tax of 13 percent, property tax (low compared to US averages), and import duties. Tax planning is genuinely complex and a CPA familiar with both systems is worth the cost. For cost context, see our Costa Rica page.