Payroll taxes
in Mexico.

SALARY PAYMENT IN Mexican Peso (MXN, $)

CONTRACT LANGUAGES Spanish / English

PAYROLL TAX 36.69% – 43.72%

PAYROLL CYCLE Bi-weekly

TIME TO HIRE 12 hours

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Mexico

What is the average employer tax rate in Mexico?

After contributions to social security, retirement, and the national housing fund, the average cost of employer tax rate in Mexico is between 36-44%.

What is the average employee tax rate in Mexico?

The tax system for employees in Mexico is an aggregate tax system, meaning that the tax rate depends on income and the range is from 1.92% to 35%. Considering the average yearly salary in Mexico is $350,000 pesos, the average tax rate is going to be 21%.

Mexico – Individual Income Tax

Taxable Income (MXN)	Tax rate 2023
0 – 8,952	1.92%
8,953 – 75,984	6.40%
75,985 – 133,536	10.88%
133,537 – 155,229	16%
155,230 – 185,852	17.92%
185,853 – 374,837	21.36%
374,838 – 590,795	23.52%
590,796 – 1,127,926	30%
1,127,927 – 1,503,902	32%
1,503,903 – 4,511,707	34%
4,511,708 +	35%

Employer contributions in Mexico

Employers in Mexico need to make contributions to social security, retirement, and the National Housing Fund.

Mexico – Employer contributions

Contribution item	Contribution rate
Social Security contributions	24.95% – 33.58% (up to MXN 195,235)
Retirement	5.15%
National Housing Fund	6%

Employee contributions in Mexico

Employees in Mexico need to make contributions to social security and retirement insurance.

Mexico – Employee contributions

Contribution item	Contribution rate
Social Security contributions	1.65%
Retirement / Old age insurance	1.125%

Hiring in Mexico, Made Easy

Your business can easily hire employees in Mexico without opening a local entity. We handle local employment law, complex tax regulations, and international payroll in 180+ countries worldwide. All you need to do is focus on your business.

FAQs

What is the tax bureau of Mexico called?

The tax bureau of Mexico is called the Servicio de Administración Tributaria or SAT.

Is there an employer payroll tax contribution in Mexico?

Yes, in Mexico employers are expected to contribute to social security, retirement, and the National Housing Fund.

How does the payroll tax system of Mexico work?

In Mexico there are federal-level and state-level tax systems and your business needs to be in compliance with both when setting up payroll. It is the company’s responsibility to withhold enough taxes from the salaries of its employees and give it to the Servicio de Adminitración Tributaria (SAT) – the tax administration of Mexico. Withholding enough taxes and calculating the burden of the employee and employer needs to be done properly by the company.

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