How income tax works in Mexico
Mexican tax residents are taxed on worldwide income under the ISR system. Wages, freelance income, business income, interest, rents and investment income can all fall inside the personal tax base.
Resident individual rates are progressive up to 35%. Nonresidents are taxed only on Mexican-source income, and employment income can face separate withholding rules rather than the resident table.
Salary withholding is only part of the picture. Employers also need to plan for social security, state payroll tax and payroll compliance, and lower-wage employees can benefit from the monthly employment subsidy if the statutory conditions are met.
Income tax brackets in Mexico
| Bracket | Rate | Notes |
|---|---|---|
| MXN 0.01 to MXN 10,135.11 | 1.92% | 2026 annual resident ISR table; before personal deductions and credits. |
| MXN 10,135.12 to MXN 86,022.11 | MXN 194.59 + 6.4% | Fixed quota plus the marginal rate on the excess over the lower limit. |
| MXN 86,022.12 to MXN 151,176.19 | MXN 5,051.37 + 10.88% | Fixed quota plus the marginal rate on the excess over the lower limit. |
| MXN 151,176.20 to MXN 175,735.66 | MXN 12,140.13 + 16% | Fixed quota plus the marginal rate on the excess over the lower limit. |
| MXN 175,735.67 to MXN 210,403.69 | MXN 16,069.64 + 17.92% | Fixed quota plus the marginal rate on the excess over the lower limit. |
| MXN 210,403.70 to MXN 424,353.97 | MXN 22,282.14 + 21.36% | Fixed quota plus the marginal rate on the excess over the lower limit. |
| MXN 424,353.98 to MXN 668,840.14 | MXN 67,981.92 + 23.52% | Fixed quota plus the marginal rate on the excess over the lower limit. |
| MXN 668,840.15 to MXN 1,276,925.98 | MXN 125,485.07 + 30% | Fixed quota plus the marginal rate on the excess over the lower limit. |
| MXN 1,276,925.99 to MXN 1,702,567.97 | MXN 307,910.81 + 32% | Fixed quota plus the marginal rate on the excess over the lower limit. |
| MXN 1,702,567.98 to MXN 5,107,703.92 | MXN 444,116.23 + 34% | Fixed quota plus the marginal rate on the excess over the lower limit. |
| Above MXN 5,107,703.92 | MXN 1,601,862.46 + 35% | 2026 annual resident ISR top band; before personal deductions and credits. |
Tax rates at a glance
- Personal income tax
- 1.92% - 35%Progressive
- Highest bracket tax
- 35%
- Foreign income tax
- Taxable for residents
- Salary withholding
- Monthly
- Employee social security
- Separate
- Tax return deadline
- 30 April
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
ExpatsFoundersEmployeesInvestorsCross-border workers
Watch out for
- A Mexico tax resident is generally taxed on worldwide income, so foreign accounts and offshore structures do not automatically stay outside the ISR net.
- Many employees with only salary income do not file a return, but the 400,000 MXN threshold and other exceptions matter.
- The real cost of employment can be much higher than ISR alone because IMSS, INFONAVIT and state payroll tax are separate from income tax.
Frequently asked questions
What is the income tax rate in Mexico?
Mexico uses progressive personal income tax rates up to 35% for residents. Nonresidents are taxed only on Mexican-source income under separate rules.
Do expats pay income tax in Mexico?
Often yes, if they become Mexican tax residents or earn Mexican-source income. The exact result depends on residence, source of income, treaty protection and withholding mechanics.
Do employees in Mexico have to file a return?
Not always. Some salary-only taxpayers can be exempt from filing, but many people still need to review the 400,000 MXN threshold, employer withholding and any extra income sources.