How to calculate net salary, Christmas bonus and severance in Costa Rica

• Gross salary: compensation before deductions.
• Net salary: the amount left after employee contributions, salary income tax and other authorized deductions.
• Christmas bonus: one twelfth of ordinary and extraordinary salary earned during the statutory period.
• Employment settlement: outstanding entitlements when employment ends. Not every component applies to every termination.

The final settlement is also different from the last payroll payment. Salary for days already worked can be included in the final payment, but it remains outstanding compensation rather than severance.

A basic estimate starts with monthly gross salary and subtracts employee contributions, salary income tax when applicable, and any other legitimate payroll deductions.

For 2026, the CCSS employer calculator shows employee contributions of 5.50% for health and maternity insurance and 4.33% for disability, old age and death insurance. The 1% Banco Popular contribution brings the ordinary combined deduction used in this guide to 10.83%, before salary income tax and other deductions.

Real payroll can also include support orders, solidarity associations, cooperatives, loans, insurance and other deductions. A general calculator is therefore an estimate and should allow custom deductions.

Salary income tax is progressive: each rate applies only to the portion of income within its bracket. The highest applicable rate is not charged on the entire salary.

Monthly tax credits for 2026 are ₡1,710 for each qualifying child and ₡2,590 for a qualifying spouse. These credits reduce calculated tax; they are not direct deductions from gross salary.

Assume a monthly gross salary of ₡1,500,000 with no tax credits or additional deductions:

1. Ordinary contributions: ₡1,500,000 × 10.83% = ₡162,450.
2. First taxable bracket: (₡1,347,000 − ₡918,000) × 10% = ₡42,900.
3. Second taxable bracket: (₡1,500,000 − ₡1,347,000) × 15% = ₡22,950.
4. Total tax before credits: ₡65,850.
5. Estimated net: ₡1,500,000 − ₡162,450 − ₡65,850 =₡1,271,700.

This example excludes voluntary deductions, support orders, payment in kind, multiple employers and special tax situations.

In the private sector, add all ordinary and extraordinary salary earned from December 1 of the previous year through November 30 of the relevant year, then divide the total by twelve.

Regular hours, overtime and other salary payments made during the period are included. When the employee did not work all twelve months, only salary actually earned is added, and the result is still divided by twelve.

• It must be paid within the first twenty days of December.
• MTSS says entitlement begins after at least one continuous month with the same employer.
• If employment ends before December, a proportional bonus is included in the settlement.
• MTSS states that no deductions apply except a child-support order.

Simple example: twelve salaries of ₡1,500,000 and no other salary payments produce a total of ₡18,000,000 and a Christmas bonus of ₡1,500,000.

A final settlement is not one universal number. It must be assembled item by item according to the type of termination, the contract and outstanding rights.

• Outstanding salary: days already worked but not paid.
• Proportional Christmas bonus: salary in the current statutory period divided by twelve.
• Unused vacation: accrued periods and the applicable proportional amount.
• Notice pay: when required and not worked.
• Severance pay: only when the legal reason for termination creates employer liability.
• Other amounts: commissions, overtime, salary incentives or contractual amounts.

The Labor Code provides a minimum of two weeks of paid vacation for every fifty continuous weeks. If the contract ends before that period is completed, it provides at least one vacation day for every month worked.

A resignation normally includes accrued rights such as salary, proportional Christmas bonus and unused vacation, but not severance. A dismissal with employer liability may add notice and severance pay. In a justified dismissal, those two items normally do not arise, while accrued rights remain payable.

Notice period

• Before three months: no notice obligation.
• From three to six months: one week.
• More than six months and up to one year: fifteen days.
• After one year: one month.

Article 30 of the Labor Code uses the average salary earned during the last six months as the basis for notice and severance, or the shorter period when the contract did not reach six months.

Severance schedule

The law caps the compensable severance period at the final eight years of employment. Fractions over six months are recognized according to the rules in Article 29.

Imagine a dismissal with employer liability after exactly three years, an average monthly salary of ₡1,500,000, notice not worked, five unused vacation days and ₡9,000,000 in salary accumulated for the proportional Christmas bonus:

1. Reference daily salary: ₡1,500,000 ÷ 30 = ₡50,000.
2. Severance: 19.5 + 20 + 20.5 = 60 days; 60 × ₡50,000 = ₡3,000,000.
3. Notice pay: one month = ₡1,500,000.
4. Proportional Christmas bonus: ₡9,000,000 ÷ 12 = ₡750,000.
5. Vacation: 5 × ₡50,000 = ₡250,000.
6. Illustrative total, excluding outstanding salary and other items: ₡5,500,000.

This example simplifies pay frequency, exact daily salary calculation and variable compensation. It does not replace a review of the contract, payroll records and reason for termination.

• ✓Gross salary and the latest payroll statement.
• ✓Ordinary and extraordinary salary for every month in the Christmas bonus period.
• ✓Exact employment start and termination dates.
• ✓Reason for termination and whether employer liability applies.
• ✓Salary earned during the last six months.
• ✓Accrued, used and unused vacation.
• ✓Notice worked, granted or paid.
• ✓Commissions, overtime and other salary payments.
• ✓Additional payroll deductions.
• ✓The year of the tax and social-security parameters used.