Mexican Income Tax

Tax Residents in Mexico: are liable to pay Mexican tax on their worldwide income

Non tax residents and non-domiciled Mexico: are liable to pay income tax on Mexican-sourced income in Mexico.

Individuals will be regarded as tax residents:

  • If the individual’s home is in Mexico they are considered to be resident for tax purposes and liable for taxes on their worldwide income.
  • If the individual also has a home in another country, he will be considered tax resident in Mexico if the centre of vital interests is in Mexico. This is deemed to be the case if more than 50% of the total income in a calendar year is of Mexican source or if the centre of professional activity is located in Mexico.
  • If the the individual falls outside of the above guidelines they will be considered non-resident and they will be liable for tax on their Mexican source income only.

Mexican-sourced income is defined as income arising out of goods or assets located within Mexican territory or from activities performed in Mexican territory.

Employment income tax is deducted at source by the employer. If the employer is non-resident, he has to file a monthly estimated tax return.

Taxable income includes:

  • salaries / wages,
  • directors’ fees,
  • bonuses,
  • gratuities,
  • allowances,
  • certain fringe benefits,
  • benefits in kind and employee profit sharing distributions.

According to Mexican income tax law certain items are exempt from taxable income, such as: indemnities for accidents and illnesses, reimbursement of medical, dental, hospital and funeral expenses, retirement benefits and pensions provided by public institutions (private retirement plans are partially exempt), social security benefits paid by public institutions, social welfare payments, savings funds and travel expenses.

2015 Income Tax Rates:

  • 1.92% from 0.01 MXN up to 4,210.41 MXN
  • 6.40% from 4,210.41 MXN up to 7,399.42 MXN
  • 10.88% from 7,399.42 MXN up to 8,601.50 MXN
  • 16.00% from 8,601.50 MXN up to10,298.35 MXN
  • 17.92% from 10,298.35 MXN up to 20,770.29 MXN
  • 21.36% from 20,770.29 MXN up to 32,736.83 MXN
  • 23.52% from 32,736.83 MXN up to 62,500.00 MXN
  • 30.00% from 62,500.00 MXN up to 83,333.33 MXN
  • 32.00% from 83,333.33 MXN up to 250,000.00 MXN
  • 34.00% from 250,000.00 MXN up to 250,000.01 MXN
  • 35.00% over 250,000.01 MXN

Benefits and allowances in kind are fully taxable and valued at their cost to the employer or at market value, however items such as reimbursement of travel expenses, housing provided for the sole interest of the employer and moving expenses are considered non taxable income and are excluded from the tax calculation.

Individual taxpayers and employees are able to deduct from their taxable income interest paid during the taxable year on mortgages for acquisition and construction of lodging, pension savings and gains derived from the redemption of shares in certain investment funds and of gifts made for cultural or sport purposes (all of these with certain limits, depending on the annual gross income of the person).

There is no special regime for expatriates in Mexico; every person rendering services in Mexico without acquiring Mexican tax resident status, will be subject to the same progressive tax rates.

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