United States vs Mexico taxes (2026): treaty, SAT and remote-work state tax

United States vs Mexico tax rates at a glance

Tax	🇺🇸 United States	🇲🇽 Mexico
Income tax	Personal income tax: 10% - 37% Social Security: 6.2% Medicare: 1.45% Additional Medicare: 0.9% State income tax: Varies	Personal income tax: 1.92% - 35% Highest bracket tax: 35% Foreign income tax: Taxable for residents Salary withholding: Monthly Employee social security: Separate Tax return deadline: 30 April
Corporate tax	C corporation tax: 21% CAMT: 15% Pass-through entities: Different State tax: Varies	Corporate income tax: 30% Dividend withholding: 10% VAT: 16% Border VAT: 8% Annual return deadline: 31 March
Capital gains tax	Long-term capital gains: 0% - 20% Short-term capital gains: 10% - 37% Qualified dividends: 0% - 20% NIIT: 3.8%	Capital gains tax: Up to 35% Listed share gains: 10% Property gains: Up to 35% Nonresident gross method: 25% Nonresident net method: 35%
Dividend tax	Qualified dividends: 0% - 20% Ordinary dividends: 10% - 37% NIIT: 3.8% State tax: Varies	Dividend withholding tax: 10% Domestic dividend tax: 10% Foreign dividend tax: Taxable
Wealth tax	Net wealth tax: 0% Property tax: Varies Estate tax: Up to 40% Gift tax: Up to 40%	Net wealth tax: 0% Net worth tax: 0% Annual asset tax: 0%
Inheritance / estate tax	Federal inheritance tax: 0% Federal estate tax: Up to 40% Federal gift tax: Up to 40% Basic exclusion: $15,000,000	Inheritance tax: 0% Estate tax: 0% Gift tax: 0% / limited Probate tax: 0%
VAT / GST / sales tax	Sales tax: Varies by state	VAT: 16%
Remote-work risk	State income tax can follow the worker, the employer or both	Worldwide tax if Mexican-resident; SAT invoicing and monthly filings
Treaty	U.S. citizenship tax continues; treaty credits and tie-breakers apply	Residence and source tests interact with the U.S.–Mexico treaty

Who wins on each tax

Personal income taxMexico

Mexico's resident scale reaches 35%; the U.S. federal ordinary top rate is 37% before state tax.

Corporate taxUnited States

U.S. C corporations pay 21% federally plus possible state tax; Mexico's federal corporate rate is 30%.

Capital gains taxUnited States

U.S. long-term federal rates are 0% to 20%; Mexico can tax gains at up to 35%, with a special 10% rule for certain share sales.

Inheritance / estate taxMexico

Mexico has no separate inheritance tax; the U.S. federal estate tax can reach 40%.

VAT / sales taxUnited States

The U.S. has no federal VAT, though state sales tax varies; Mexico's standard VAT is 16%, with 8% in designated border areas.

The verdict

Headline personal rates are closer than most U.S.–Europe pairs. Mexico taxes resident individuals at 1.92% to 35% on worldwide income. The United States uses 10% to 37% federally before state tax. Corporate tax is not close: Mexico's federal CIT is 30%, against 21% U.S. federal C-corporation tax plus possible state tax.

The live constraints are residence days, the treaty and SAT administration. Mexican residence can arise quickly and then tax worldwide income. CFDI invoicing, monthly filings and digital-platform withholding are the compliance reality. A U.S. remote worker who keeps a U.S. employer, U.S. home or U.S. days can still create state income-tax nexus even after taking a Mexican temporary-resident card.

Choose Mexico for a lower personal top rate, no separate inheritance tax and a North American operating footprint. Choose the United States for the 21% federal company rate, preferential long-term gains and deeper capital markets. Dual residents need the treaty, not a day-count guess.

How to read this comparison

Mexico is not a territorial beach jurisdiction. It is a worldwide-tax country with a 35% personal top rate, 30% companies, 16% VAT and a digital tax administration that expects monthly discipline. The United States is a worldwide-tax country for its citizens, with states that do not forget remote employees.

Resident Mexican individuals are generally taxed on worldwide income at 1.92% to 35%. Non-residents are taxed on Mexican-source income. That is close to the U.S. federal ordinary range of 10% to 37%, and it can look better than a California or New York combined rate. It can look worse than a Washington or Texas resident who only pays federal tax. Crossing the border does not settle which of those American baselines you still have.

State tax on remote work is the U.S. surprise. A software engineer who “moves to Mexico City” but keeps a New York employer, a New York apartment, or enough New York days can remain in the New York system. Convenience-of-the-employer rules, resident-day counts and payroll withholding differ by state. Mexico then asks whether you have become a Mexican tax resident. If you have, Mexico wants worldwide income, including the U.S. salary. The U.S.–Mexico treaty is the tool for dual-residence tie-breaks and double-tax relief. Day-counting without the treaty is how people pay twice.

SAT is the Mexican operating system. CFDI electronic invoicing, monthly provisional payments, annual filings, digital-platform withholding and payroll administration are the 2026 compliance centre. IMSS, INFONAVIT, state payroll tax and employer contributions can outweigh a modest income-tax saving on a hire. This is not a country you enter with a tourist card and a U.S. LLC invoice stream.

Corporate tax favours the United States on the headline: 21% federal versus 30% Mexican CIT. Dividends can add 10% Mexican withholding. Capital gains can reach 35%, with a special 10% share rule in defined cases, against U.S. long-term federal rates of 0% to 20%. Mexico has no separate wealth or inheritance tax, which is a genuine contrast with a U.S. taxable estate of up to 40%. Standard VAT is 16%, or 8% in designated border zones.

A workable plan names the U.S. state, the Mexican day count, the treaty residence position, the SAT calendar and the employer’s payroll setup. A remote-work tweet is not a tax position.

Which one fits you

🇺🇸 Choose United States if you're a…

Companies that want 21% federal corporate tax
Investors using federal long-term gain rates
People whose workdays and employer remain in a U.S. state

🇲🇽 Choose Mexico if you're a…

Individuals comparing a 35% Mexican top rate with 37% plus a high-tax state
Families using Mexico's lack of inheritance tax
Founders with Mexican substance and SAT capacity

Frequently asked questions

Is Mexico lower tax than the United States?

For personal top rates, Mexico's 35% can beat 37% federal plus a high-tax state. For companies, 30% Mexican CIT is usually heavier than 21% U.S. federal. SAT compliance is not optional.

Can I keep a U.S. remote job from Mexico without U.S. state tax?

Not automatically. Some states tax residents, some tax source wages, and payroll withholding can continue. Mexican residence can add Mexican worldwide tax on the same salary.

Does Mexico have wealth tax?

No separate net wealth tax or inheritance tax. VAT, payroll charges, local property tax and notarial costs still apply.