How is income tax calculated in Nicaragua?
Residents pay no tax on the first NIO 100,000 of taxable income. The rate is 15% up to NIO 200,000, 20% up to NIO 350,000, 25% up to NIO 500,000 and 30% above.
Employees pay 7% social security on gross salary, and this contribution is deductible for income tax.
What is the income tax rate in Nicaragua?
| Taxable income | Rate |
|---|---|
| NIO 0 – NIO 100,000 | 0% |
| NIO 100,000 – NIO 200,000 | 15% |
| NIO 200,000 – NIO 350,000 | 20% |
| NIO 350,000 – NIO 500,000 | 25% |
| Over NIO 500,000 | 30% |
What mandatory salary deductions apply?
- Social security (INSS, employee): 7% of pay.
Gross salary and take-home salary
Gross salary is what your contract says before anything is taken off. Take-home salary is what reaches your bank account after income tax and the compulsory employee contributions. Employer contributions are paid on top of your salary and are not taken from it.
Example: NIO 110,000.00 a month
An employee earning 110,000 a month, about US$3,000.
| Item | Monthly | Annual |
|---|---|---|
| Gross salary | NIO 110,000.00 | NIO 1,320,000.00 |
| Income tax | NIO 25,065.00 | NIO 300,780.00 |
| Compulsory contributions | NIO 7,700.00 | NIO 92,400.00 |
| Take-home pay | NIO 77,235.00 | NIO 926,820.00 |
Effective income tax rate 22.8%; all deductions 29.8%.
Frequently asked questions
Is social security deductible?
Yes. The employee's 7% contribution is a deductible expense for income tax.
How are non-residents taxed?
Non-residents receiving Nicaraguan-source income pay a 20% definitive withholding tax.
Are foreigners treated differently?
No. There are no concessions of any kind to foreigners.
Official sources
- PwC Worldwide Tax Summaries (reviewed 04 August 2026): Nicaragua: Individual - Taxes on personal income. Read 5 November 2026.
- PwC Worldwide Tax Summaries (reviewed 04 August 2026): Nicaragua: Individual - Other taxes. Read 5 November 2026.
- PwC Worldwide Tax Summaries (reviewed 04 August 2026): Nicaragua: Individual - Deductions. Read 5 November 2026.
- PwC Worldwide Tax Summaries (reviewed 04 August 2026): Nicaragua: Individual - Income determination. Read 5 November 2026.
Last reviewed 5 November 2026. An estimate for planning, not tax advice; your employer’s payroll and the tax authority decide what is actually withheld.
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