Nicaragua Income Tax Calculator 2026
Last updated: January 2026
The Income Tax (IR - Impuesto sobre la Renta) in Nicaragua for 2026 is calculated with progressive brackets established by the DGI. The first C$100,000 annually is exempt. Brackets are: C$100,001-C$200,000 at 15%, C$200,001-C$350,000 at 20%, C$350,001-C$500,000 at 25%, and over C$500,000 at 30%. Employee deductions include INSS (7%) which is subtracted before calculating taxable income. The employer contributes a total of 24.5% (INSS 22.5% + INATEC 2%), the highest employer contribution in Central America. IR is withheld monthly by the employer. Nicaragua's tax system denominates all amounts in córdobas (C$). The minimum wage varies by economic sector.
FAQ
What are the income tax brackets in Nicaragua 2026?
Nicaragua has 5 brackets: up to C$100,000 exempt, C$100,001-C$200,000 at 15%, C$200,001-C$350,000 at 20%, C$350,001-C$500,000 at 25%, and over C$500,000 at 30%. These apply to annual taxable income after INSS deductions.
How much is the INSS employee deduction in Nicaragua?
The employee's INSS contribution is 7% of gross salary. This is deducted before calculating taxable income for IR purposes. The employer contributes 22.5% to INSS plus 2% to INATEC for a total of 24.5% — the highest employer social security burden in Central America.
What is INATEC and why do employers pay it?
INATEC (Instituto Nacional Tecnológico) is a 2% employer-only contribution for worker technical training. It is mandatory for all employers and is collected alongside INSS contributions. Workers do not pay INATEC — it is entirely an employer cost.
How is IR withheld monthly in Nicaragua?
The employer calculates the projected annual IR based on monthly salary, applies the INSS deduction and progressive brackets, and divides by 12 for monthly withholding. This is reported to the DGI monthly through the electronic tax system.
What income is exempt from IR in Nicaragua?
Exempt from IR in Nicaragua: the first C$100,000 of annual income, aguinaldo (13th month), severance pay within legal limits, INSS disability and retirement benefits, and indemnities ordered by labor courts. Vacation pay is subject to normal IR withholding.