Which Lifestyle Would Cost Our Family Less - Oregon or Costa Rica? - Part 1: Taxes

Gringo expats decide to retire in Costa Rica for a wide variety of reasons. Topping many expats' lists of desirable advantages would be maintaining their living standard at a lower cost or enjoying a higher standard of living for the same cost. That goes for adventurous, frugal younger expats as well as older expats such as myself stretching their retirement dollars.

Costa Rica can certainly offer terrific savings, especially in the areas of health care and housing. Many other daily expenses, however - automobiles being the most egregious example - are higher than what most norteamericanos are accustomed to. Depending on your financial status, lifestyle choices, goals and ability to adjust, the comparative financial equations we all go through at some point before moving here will each have their highs and lows.
calculating living expenses in Costa Rica and Oregon
Taking Stock of Expat Living Expenses

One Constant Is That Things Change

As we approach a new phase in which our own income will shift to primarily U.S. Social Security, our calculations are changing. In fact, just in terms of cost of living, we find that it may actually be cheaper for us to reside in our previous home state of Oregon. I'm not going into all the gory details of that calculation, but this two-part article does hit the high points. Hopefully, it provides additional food for thought to those considering moving to Costa Rica

For Us, Taxes Would Be Less Living in Oregon


I started the reevaluation of our financial perspective by comparing taxes we pay here and what I'd expect to pay in Oregon. On the Costa Rica side, I included the corporation tax (which is suspended, but reinstatement looks imminent), our property tax, marchamo, our Caja premium and sales tax. I consider Caja a tax, since it is obligatory and we never use it, but also because there is a similar "tax" imposed on U.S. residents in the form of the obligation to carry health insurance due to the ACA health care act.

Costa Rica's Sales Tax Is a Killer


Of those tax items, sales tax in Costa Rica is the most difficult to estimate, since it is ubiquitous and difficult to track, but based on what I know we spend and subtracting things not subject to that tax I feel my estimate is easily within 10%. Sales tax in Costa Rica is 13%, which makes it the clear winner in terms of our total tax bill with Caja coming in a near second.

One tax area I did not include is fuel tax, since I enclose it within overall vehicle expenses, which I cover in Part 2.

Oregon's Biggest Tax Would Be Property Tax


Our projected tax burden in Oregon would be dominated by property tax, which although lower than many states is still a primary source of funds for local and state government. I estimated it would be about $300 more than we pay in sales tax here. Oregon has no sales tax, however, and does not tax SS benefit income. Even with the extra investment income we have, our Oregon income tax bill would be zero. The same goes for our federal income tax bill, since we would not exceed the Total Combined Income limit.

However, we would be obligated to buy health insurance and the total premiums would be about 50% more than our Caja premiums. The deductible portion (which Caja does not have, since everything is paid for) I have included in Part 2 expenses.

The bottom line in the taxes comparison is that we would pay about $300 less in taxes living in Oregon.

In the next installment, I'll go into a comparison of other major expenses we have and how those might play out if we lived back in our old home state. The two biggies there are the cost of vehicle ownership, which is more or less universally applicable for any expat in Costa Rica, and health care costs, which in our situation could be quite different for higher income retirees.

I have left out all the costs of moving and obtaining residency, which were substantial, but as they are not ongoing, it seems fair to not count them.

Part 2 discusses the non-financial aspects in this Costa Rica versus Oregon match-up, which could carry the day for one or the other. 


  1. Very interesting. Costa Rica is more expensive than my home state and I have ultimately decided that I'm in Costa Rica for the climate, nature, and laid back vibes. Now I have to step up my work game to be able to stay...so far so good :)
    Looking forward to part 2...

    1. That's where I'm leaning too as Part 2 starts to gel in my mind.

  2. Looking forward to your next post. Did you have heating bills in Oregon?

    1. Yes, and I'll get into that in Part 2.

  3. We also compared - and ended up moving to New Mexico. Some few things to consider: (1) CR inflation is high! (2) ACA subsidies can be significant (3) the results ofthe upcoming election may mean the end of ACA altogether or in part
    We may have to adjust plans again...

  4. 1) has not been true for several years now. It has the most stable currency and low inflation among latin america. Besides, CPI in the U.S. is not a true reflection of the real costs to middle/low income U.S. citizens. ACA subsidies are really, to me, only significant if you can qualify for Silver CSR, otherwise, health ins. even with other ACA plans is terribly expensive in the U.S. Those who get their plan via their employer often think their ins. is cheap, but they rarely count the employer contribution, which otherwise would go to their salary in a competitive workplace.


Thanks so much for your comment! - Casey