Nicaragua Personal Income Tax Guide 2026

Overview — Dirección General de Ingresos (DGI)

The Dirección General de Ingresos (DGI) administers all tax matters in Nicaragua under the Tax Code (Código Tributario). Nicaraguan tax residents are taxed on Nicaraguan-source income; non-residents are also taxed only on Nicaraguan-source income under the territorial system. Tax residency is determined by physical presence of 180 days or more in a calendar year or having the centre of economic interests or family in Nicaragua. Employees have tax withheld at source by their employer under the PIT system.

PIT Tax Brackets 2026

Nicaragua applies a progressive annual bracket system for personal income tax with a top rate of 30%. For 2026, the annual brackets (in NIO) are as follows:

• 0% — on annual income up to NIO 100,000
• 15% — on the next NIO 100,000 (NIO 100,001–200,000) — minimum tax 0, 15% on excess over 100K
• 20% — on the next NIO 150,000 (NIO 200,001–350,000) — minimum tax 15,000, 20% on excess over 200K
• 25% — on the next NIO 150,000 (NIO 350,001–500,000) — minimum tax 45,000, 25% on excess over 350K
• 30% — on annual income above NIO 500,000 — minimum tax 82,500, 30% on excess over 500K

These brackets mean that a taxpayer earning NIO 250,000/year pays approximately NIO 25,000 in PIT — an effective rate of ~10%. A taxpayer earning NIO 1,000,000/year pays approximately NIO 232,500 — an effective rate of ~23.25%.

Personal Deductions

Individuals may deduct up to 25% of gross income for qualifying education and health expenses, subject to a maximum of NIO 20,000 per year. Qualifying expenses include medical consultations, hospitalisation, prescription medications, school tuition, and educational materials. Supporting documentation (receipts, invoices) must be maintained for DGI audit purposes. The deduction is claimed on the annual tax return filed by 31 March.

PIT Withholding

Employers are required to withhold personal income tax from employee wages each month. The employer calculates monthly tax based on gross salary, applies the annualised progressive bracket rates, and remits the tax to DGI. Employers must register with DGI and file monthly PIT declarations. Failure to remit on time attracts penalties and interest on unpaid tax.

Taxable and Non-Taxable Income

Taxable employment income includes salaries, wages, bonuses, commissions, overtime, allowances, director fees, and other remuneration. Non-taxable items include statutory social security contributions, severance payments within legal limits, and certain fringe benefits. Nicaragua follows a territorial system, so only income sourced in Nicaragua is taxable — foreign-source income is generally not subject to Nicaraguan PIT.

Filing Requirements

Employees whose tax is fully withheld at source do not need to file an annual personal tax return. However, individuals with multiple sources of income, self-employment, or business income must file an annual income tax return by 31 March of the following year. Self-employed individuals and sole proprietors are taxed under the general PIT regime. Late filing attracts penalties and monthly interest on unpaid tax.

FAQs

Do I need to file a tax return if I am a salaried employee?

No, if your employer withholds PIT correctly each month, you are not required to file an annual return. However, if you have additional income from other sources, a return must be filed.

Are bonuses subject to PIT?

Yes, all bonuses, commissions, and additional remuneration are taxable as employment income and subject to the same progressive rates.

Is there joint filing for married couples?

No, Nicaragua does not allow joint filing. Each individual is taxed separately on their own income.

What is the currency used for tax calculations?

Tax is calculated in Nicaraguan Córdobas (NIO, symbol C$). The DGI provides official exchange rates for conversion from foreign currencies.

Disclaimer

This guide provides general information about Nicaraguan personal income tax for the 2026 tax year. Tax laws, rates, and regulations may change. Always consult with a qualified Nicaraguan tax advisor or the Dirección General de Ingresos for advice specific to your situation. InvestmentKit does not provide tax advice.