Income Tax Calculator (Mexico)

How the Mexican Income Tax (ISR) System Works

Mexico's personal income tax is called Impuesto Sobre la Renta (ISR), administered by the Servicio de Administracion Tributaria (SAT). The ISR uses a progressive rate system with 11 brackets, ranging from 1.92% to 35%. Unlike many countries that simply apply marginal rates, Mexico's system uses a cuota fija (fixed quota) for each bracket — a predetermined amount of tax for income up to the bracket's lower limit, plus a marginal rate on the excess.

For salaried employees, employers withhold ISR monthly through the payroll system and remit it to SAT. Mexico's tax year runs January 1 to December 31, with annual tax returns due by April 30 of the following year. All taxpayers must have a Registro Federal de Contribuyentes (RFC) — the federal taxpayer registration number. Since 2022, SAT has required all adults over 18 to register for an RFC, even those without income.

A distinctive feature of Mexican employment law is the aguinaldo, a mandatory year-end bonus equivalent to at least 15 days of salary. The first 30 days of minimum wage is exempt from ISR; any amount above that is taxed as regular income. Employers also pay social security contributions to IMSS (Instituto Mexicano del Seguro Social), which covers healthcare, disability, retirement, and housing (INFONAVIT). Employee contributions to IMSS are relatively small, with the employer bearing most of the cost. Mexico also has a subsidio al empleo (employment subsidy) that effectively provides a tax credit to low-income workers, potentially reducing their ISR to zero.

Current Mexican ISR Tax Brackets (2025)

The following annual ISR brackets apply. Each bracket includes a fixed quota (cuota fija) plus a marginal rate on income exceeding the lower limit:

Key Mexican Tax Terms

• ISR (Impuesto Sobre la Renta) — Mexico's income tax, applicable to individuals and corporations. For employees, ISR is withheld monthly from payroll.
• SAT (Servicio de Administracion Tributaria) — The Mexican tax authority responsible for tax collection and administration. Taxpayers interact with SAT through the portal sat.gob.mx.
• RFC (Registro Federal de Contribuyentes) — The federal taxpayer ID number, required for employment, banking, and all tax transactions. Since 2022, all adults 18+ must register.
• CFDI (Comprobante Fiscal Digital por Internet) — Mexico's mandatory electronic invoicing system. All invoices must be issued and validated through SAT's system, making tax compliance highly digitized.
• Aguinaldo — A legally mandated year-end bonus of at least 15 days' salary, paid by December 20. Employers offering more than the minimum 15 days are common. The first 30 days of minimum wage is tax-exempt.
• Subsidio al empleo — An employment subsidy (tax credit) for low-income workers. Those earning below approximately MXN 7,382/month can receive a subsidy that offsets their ISR entirely.
• IMSS (Instituto Mexicano del Seguro Social) — Social security covering healthcare, disability, maternity, retirement, and daycare. Employer contributions range from 20-30% of salary; employee share is approximately 2.8%.
• INFONAVIT — The national housing fund. Employers contribute 5% of employee salary. Workers accumulate credits toward home purchases or improvements.
• Afore — Retirement savings fund administrators. Employee contributes 1.125% of salary, employer 2%, and government adds a social quota. Workers choose their Afore provider.

Practical Tax Examples in MXN

Example 1 — Employee earning MXN 15,000/month (MXN 180,000/year): Using the bracket table: income of 180,000 falls in the 155,230-185,853 bracket. ISR = cuota fija of 14,194.54 + 17.92% on (180,000 - 155,230) = 14,194.54 + 4,438 = MXN 18,633. Monthly ISR approximately MXN 1,553. Effective rate: 10.4%.

Example 2 — Employee earning MXN 40,000/month (MXN 480,000/year): Income falls in the 374,838-590,796 bracket. ISR = 60,049.40 + 23.52% on (480,000 - 374,838) = 60,049.40 + 24,734 = MXN 84,783. Monthly ISR approximately MXN 7,065. Effective rate: 17.7%.

Example 3 — High earner at MXN 100,000/month (MXN 1,200,000/year): Falls in the 1,127,927-1,503,902 bracket. ISR = 271,981.99 + 32% on (1,200,000 - 1,127,927) = 271,981.99 + 23,063 = MXN 295,045. Monthly ISR approximately MXN 24,587. Effective rate: 24.6%.

Tax-Saving Strategies in Mexico

• Maximize personal deductions: Deductible expenses include medical/dental fees, hospital costs, funeral expenses, mortgage interest (inflation-adjusted rate), school tuition fees, and charitable donations to authorized organizations.
• Contribute to retirement accounts: Voluntary contributions to Afore or personal retirement plans (planes personales de retiro) are deductible up to 10% of annual income or 5 UMAs annual (approximately MXN 189,222 in 2025), whichever is lower.
• Claim school tuition deductions: Annual tuition deduction limits are: preschool MXN 14,200, primary MXN 12,900, secondary MXN 19,900, professional technical MXN 17,100, and high school/bachelor MXN 24,500 per student.
• Use the CFDI system strategically: Ensure all deductible payments are made electronically (bank transfer, credit/debit card) and you receive proper CFDI invoices. Cash payments above MXN 2,000 are generally not deductible.
• Claim medical expense deductions: Medical, dental, psychological, and nutritional professional fees are fully deductible (no cap within the overall 15% limit). Always request a CFDI from your healthcare provider.
• Consider the RIF/RESICO regime if self-employed: Self-employed individuals and small business owners earning under MXN 3.5 million annually can opt for the Regimen Simplificado de Confianza (RESICO), which applies flat rates of 1-2.5% on gross income — dramatically lower than progressive ISR rates.