Mexican Tax Calculator
Calculate Mexican ISR income tax and social security from gross salary. Enter values for instant results with step-by-step formulas.
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer
Mexican Tax Calculator
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Formula: ISR = Fixed Quota + (Gross - Bracket Lower Limit) x Marginal Rate - Employment Subsidy
Worked example — Net Monthly: $28,279.44 MXN | Effective Rate: 19.20%
Formula
ISR = Fixed Quota + (Gross - Bracket Lower Limit) x Marginal Rate - Employment Subsidy
Mexican ISR uses progressive brackets with fixed quotas. For each bracket, you pay the fixed quota plus the marginal rate on income exceeding the bracket lower limit. Low-income workers receive an employment subsidy that reduces the ISR owed. IMSS employee contributions add approximately 2.375% on salary up to 25 UMA.
Worked Examples
Example 1: Mid-Level Employee Monthly Tax
Problem:Calculate the net salary for an employee earning $35,000 MXN monthly gross with IMSS deductions.
Solution:Monthly gross: $35,000 MXN ISR bracket: $31,236.50 - $49,233.00 (23.52% marginal rate) Excess over lower limit: $35,000 - $31,236.50 = $3,763.50 Marginal tax: $3,763.50 x 23.52% = $885.19 ISR before subsidy: $5,004.12 + $885.19 = $5,889.31 Subsidy: $0 (income above subsidy threshold) ISR: $5,889.31 IMSS: $35,000 x 2.375% = $831.25 Total deductions: $6,720.56 Net salary: $28,279.44
Result:Net Monthly: $28,279.44 MXN | Effective Rate: 19.20%
Example 2: Entry-Level Worker with Subsidy
Problem:Calculate net salary for a worker earning $8,500 MXN monthly gross.
Solution:Monthly gross: $8,500 MXN ISR bracket: $6,332.06 - $11,128.01 (10.88% marginal rate) Excess: $8,500 - $6,332.06 = $2,167.94 Marginal tax: $2,167.94 x 10.88% = $235.87 ISR before subsidy: $371.83 + $235.87 = $607.70 Subsidy: $0 (income above subsidy range) ISR: $607.70 IMSS: $8,500 x 2.375% = $201.88 Net: $7,690.43
Result:Net Monthly: $7,690.43 MXN | Effective Rate: 9.52%
Frequently Asked Questions
What is ISR and how is it calculated in Mexico?
ISR (Impuesto Sobre la Renta) is Mexico's personal income tax, similar to federal income tax in the United States. It uses a progressive bracket system where higher income is taxed at higher rates, ranging from 1.92% to 35%. The calculation involves finding your income bracket, applying the marginal rate to the amount exceeding the bracket's lower limit, and adding a fixed quota for that bracket. For salaried employees, employers withhold ISR monthly from payroll. The brackets are updated annually by the SAT (Servicio de Administracion Tributaria), and taxpayers may be eligible for deductions and credits that reduce the final amount owed.
What is the employment subsidy (subsidio al empleo) in Mexico?
The employment subsidy (subsidio al empleo) is a tax credit available to lower-income workers in Mexico that reduces or eliminates their ISR obligation. Workers earning below certain thresholds receive a monthly subsidy that directly offsets their calculated ISR. If the subsidy exceeds the ISR amount, the worker effectively receives the difference as additional income from their employer. The subsidy amounts decrease as income increases, eventually reaching zero for higher earners. This mechanism ensures that minimum wage and low-income workers keep more of their earnings, functioning as a progressive tax relief measure built into the payroll system.
How do IMSS contributions work for employees in Mexico?
IMSS (Instituto Mexicano del Seguro Social) is Mexico's social security system providing healthcare, disability, retirement, and other benefits. Employee contributions are automatically deducted from payroll and cover several branches: sickness and maternity (0.25% of salary), disability and life insurance (0.625% of salary), retirement savings (1.125%), and unemployment/old age (1.125%). The total employee contribution is approximately 2.375% of the salary base, which is capped at 25 times the UMA (Unidad de Medida y Actualizacion). Employers pay a significantly larger share of IMSS contributions on behalf of each employee.
What is the UMA and how does it affect tax calculations?
The UMA (Unidad de Medida y Actualizacion) is a reference unit used in Mexico for calculating government obligations, fines, social security contributions, and other fiscal matters. It replaced the minimum wage as the reference unit in 2016 to decouple social benefits from wage policy. The daily UMA value is updated annually by INEGI based on the Consumer Price Index. For 2024, the daily UMA is approximately 108.57 MXN (monthly UMA approximately 3,300.53 MXN). IMSS contribution bases are capped at 25 times the daily UMA, which means employees earning above this threshold have their social security contributions limited.
What deductions can reduce my ISR tax burden in Mexico?
Mexican taxpayers can claim several personal deductions to reduce their annual ISR. These include medical, dental, and hospital expenses for yourself and dependents; funeral expenses; mortgage interest (limited to 750,000 UDI); charitable donations to authorized institutions; private school tuition (up to certain limits per education level); and contributions to personal retirement accounts (up to 10% of income or 5 UMA annually). Professional fees for nutrition and psychology are also deductible. Total personal deductions are capped at 15% of annual income or 5 annual UMA, whichever is less. These deductions are claimed in the annual tax return filed in April.
How does the aguinaldo (Christmas bonus) get taxed in Mexico?
The aguinaldo is a mandatory year-end bonus equivalent to at least 15 days of salary, paid by December 20th each year. For tax purposes, the first 30 days of minimum wage equivalent is exempt from ISR. The portion exceeding this exemption is taxed, but a special calculation method applies to prevent the bonus from pushing you into a higher tax bracket unfairly. The employer calculates the proportional daily ISR rate based on your regular salary and applies it to the taxable portion of the aguinaldo. This special procedure (outlined in Article 96 of the ISR law) typically results in a lower effective tax rate on the bonus compared to adding it to regular monthly income.
What is the difference between nominal salary and integrated salary in Mexico?
Nominal salary (salario nominal) is the base monthly or daily wage agreed upon in the employment contract. Integrated salary (salario diario integrado or SDI) includes the nominal salary plus all benefits and bonuses prorated on a daily basis, such as the aguinaldo, vacation premium, and other guaranteed compensation. The SDI is used as the basis for calculating IMSS and INFONAVIT contributions. For example, with 15 days aguinaldo and 25% vacation premium on 12 vacation days, the integration factor is approximately 1.0493, meaning the SDI is about 4.93% higher than the nominal daily salary. Employers must register and update the SDI with IMSS whenever benefits change.
How often do Mexican tax brackets and rates change?
Mexican ISR tax brackets are updated annually to account for inflation, as mandated by the ISR law. The SAT publishes updated monthly and annual bracket tables in the Diario Oficial de la Federacion, typically in December for the following year. While the marginal rates themselves (1.92% through 35%) have remained relatively stable for several years, the peso amounts defining each bracket are adjusted upward based on inflation. The employment subsidy table and UMA values are also updated annually. Major structural changes to the tax system require legislative approval through the Miscellaneous Fiscal Resolution (Resolucion Miscelanea Fiscal) or amendments to the ISR law itself.
Do freelancers and self-employed workers pay different taxes in Mexico?
Yes, self-employed individuals and freelancers (trabajadores independientes) in Mexico face different tax obligations than salaried employees. They must register with the SAT under the appropriate tax regime, such as the Simplified Trust Regime (RESICO) for individuals earning up to 3.5 million MXN annually, or the general regime for professional activities. RESICO offers significantly lower rates (1% to 2.5% based on income level). Under the general regime, freelancers pay ISR using the same progressive brackets but must also charge 16% IVA (value-added tax) on their invoices, file monthly provisional ISR payments, and handle their own IMSS contributions through voluntary enrollment.
What happens if I work in Mexico but am a foreign national?
Foreign nationals working in Mexico are subject to Mexican tax law based on their residency status. Tax residents (those with a permanent home or center of vital interests in Mexico) are taxed on worldwide income using the same progressive ISR brackets as Mexican citizens. Non-residents are taxed only on Mexican-source income at flat rates: 15-30% for salary income depending on the amount, 25% for professional services, and varying rates for other income types. Mexico has tax treaties with over 60 countries to prevent double taxation. Foreign workers must obtain an RFC (Registro Federal de Contribuyentes) and comply with monthly withholding and annual filing requirements.
References
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer · Editorial policy
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