Insights
Mexico Salary Income Tax 2026: Rates, Withholding and Payroll
Insights · By Chen ChunJie · Updated 31 October 2026
Salaries in Mexico are taxed through the employer. Each pay period, the employer withholds income tax (ISR) using SAT’s progressive tables, with rates from 1.92% to 35%, and pays it to SAT by the 17th of the following month. Lower earners receive an employment subsidy that reduces the tax. On a monthly salary of MXN 30,000, the 2026 tables give about MXN 4,520 of income tax. This guide explains who is taxed, how withholding works and what employers report.
Last reviewed in October 2026 against SAT’s 2026 tax tables and the 2026 employment subsidy decree. General information, not tax advice.
Who pays income tax on salary in Mexico
Tax residents pay income tax on their worldwide income. An individual is generally resident if their home is in Mexico, or, with homes in more than one country, if their centre of vital interests is in Mexico. Mexican nationals are presumed resident unless they show otherwise.
Non-residents pay tax only on Mexican-source income, at flat rates: the first MXN 125,900 of salary in a 12-month period is exempt, 15% applies up to MXN 1,000,000 and 30% above that. Cross-border cases, such as someone paid from abroad for work in Mexico, need individual advice.
How withholding works each pay period
The employer adds up the taxable pay for the period, finds the band in SAT’s table for that period (daily, weekly, ten-day, fortnightly or monthly), and applies the fixed amount plus the band’s rate to the income above the lower limit. Monthly and annual tables are different and must not be mixed. Source: SAT, 2026 Annex 8 tax tables.
| Monthly taxable salary | How the 2026 monthly table applies | Income tax |
|---|---|---|
| MXN 30,000 | MXN 1,856.84 + 21.36% of the amount above MXN 17,533.65 | About MXN 4,520 |
| MXN 100,000 | MXN 10,457.09 + 30% of the amount above MXN 55,736.69 | About MXN 23,736 |
The examples assume the whole salary is ordinary taxable pay with no exempt items or other adjustments. The top rate of 35% applies to the highest band.
The employment subsidy for lower earners
In 2026, employees whose monthly income does not exceed MXN 11,492.66 receive an employment subsidy of 15.02% of the monthly UMA, about MXN 535.65 a month, which the employer applies against the tax withheld. January 2026 had a transitional amount. Sources: DOF, 2026 employment subsidy decree; INEGI, 2026 UMA.
Exempt and partly exempt pay
| Item | Exempt amount |
|---|---|
| Aguinaldo | Up to 30 UMAs a year |
| Vacation premium | Up to 15 UMAs a year |
| PTU profit sharing | Up to 15 UMAs a year |
| Sunday premium | Up to 15 UMAs a year |
| Overtime | Within limits, 50% exempt up to 5 UMAs a week; fully exempt for minimum-wage earners |
| Social security benefits and some statutory payments | Exempt within the limits of the Income Tax Law |
Amounts above the exempt limits are taxed with the rest of the salary. In 2026 the UMA is MXN 117.31 a day.
Other deductions from pay
Employees also pay their share of IMSS social security, usually around 2.5% to 3% of salary for professional roles, and their employer deducts any INFONAVIT housing loan repayments. On a salary of MXN 30,000 a month, the employee’s IMSS share is about MXN 842. See Mexico EOR cost for the full breakdown.
What employers must do
- Withhold income tax each pay period and pay it to SAT by the 17th of the following month
- Issue a CFDI payroll receipt for every payment
- Apply the employment subsidy where it is due
- Run the annual tax adjustment for employees who qualify
- Report salaries and withholdings to SAT each year
Our Mexico payroll service handles these steps for companies with their own Mexican entity. Without one, our employer of record service can employ the person where the arrangement allows it.
When employees file their own annual return
Most employees with one employer do not need to file, because the employer’s annual adjustment settles the year. An employee must file an annual return, due in April, if, for example, their salary exceeded MXN 400,000 in the year, they had two or more employers at the same time, they stopped working before 31 December, or they had other income. Many file anyway to claim personal deductions, such as medical expenses and mortgage interest, which are claimed in the annual return, not through monthly payroll.
Questions about salary tax in Mexico
What are the income tax rates in Mexico?
For residents, progressive rates from 1.92% to 35%, applied through SAT’s tables for each pay period. Non-residents pay flat rates of 15% or 30% on Mexican-source salary above an exempt amount.
How much tax is withheld from a MXN 30,000 monthly salary?
About MXN 4,520 under the 2026 monthly table, assuming all of it is ordinary taxable pay. The employee’s IMSS share of about MXN 842 is also deducted.
Is the aguinaldo taxed in Mexico?
Only the part above 30 UMAs a year, about MXN 3,519 in 2026. The rest is exempt.
Do employees file a tax return in Mexico?
Not always. The employer’s annual adjustment settles the year for many employees. Those who earned more than MXN 400,000, had more than one employer or had other income file a return in April.
Who withholds income tax for an EOR employee?
The employer of record. It withholds income tax each pay period, pays it to SAT and issues the CFDI payroll receipts. See Employer of Record in Mexico.
Planning a hire in Mexico?
Tell us about the role and the salary, and we will reply with the route we recommend and the full annual cost.
Related
IMSS, INFONAVIT, payroll tax and worked examples in pesos.
An employer checklist for foreign companies.
Official sources: Federal Labour Law (LFT), Chamber of Deputies; STPS, REPSE register of specialised services; DOF, 2026 working-hours reform; CONASAMI, 2026 minimum wages; PROFEDET, vacation entitlement; PROFEDET, resignation and dismissal; INEGI, 2026 UMA; IMSS, employer contributions (SUA); SAT, 2026 Annex 8 tax tables; DOF, 2026 employment subsidy decree; INM, visa for a job offer; DOF, NOM-037-STPS-2023 on telework. Also: the Social Security Law, the INFONAVIT Law, the Income Tax Law and the 2021 subcontracting reform (DOF, 23 April 2021). State payroll tax rates are set by each state. Reviewed October 2026; general information, not legal or tax advice.