Employer Tax Contributions

Tax Type	Rate	Base
Income Tax Withholding (ISR)	1.92% - 35% (progressive)	Employee's income
Social Security (IMSS)	~24% - 38%	Employee's salary
State Payroll Tax	1% - 3%	Total payroll
Housing Fund (INFONAVIT)	5%	Employee's integrated salary

Filing & Compliance

• Monthly tax payments (ISR, IMSS, State Payroll Tax) are due between the 17th and 22nd of the following month.
• INFONAVIT contributions are paid bimonthly by the 17th of the month.
• Annual tax returns for corporations must be filed by March 31.

In Mexico, employers are responsible for withholding and remitting various taxes from employee salaries, encompassing income tax, social security contributions, and state payroll taxes.

Income Tax (ISR)

Employee income tax, known as Impuesto Sobre la Renta (ISR), is calculated based on a progressive table with rates ranging from 1.92% to 35%. For 2025, the rates applicable to resident individuals are:

• 1.92% for monthly income up to 8,952.49 MXN
• 6.40% for monthly income between 8,952.50 MXN and 75,984.55 MXN
• 10.88% for monthly income between 75,984.56 MXN and 133,536.07 MXN
• ...
• 35% for monthly income exceeding 4,511,707.38 MXN.

Non-residents are subject to different rates, typically between 15% and 30%. A tax exemption exists for the first 125,900 MXN of employment income within a 12-month period. Employers withhold ISR based on the employee's projected annual income and remit it monthly to the Tax Administration Service (SAT) by the 17th of the following month.

Social Security Contributions (IMSS)

Employers also deduct social security contributions (Instituto Mexicano del Seguro Social - IMSS) from employee salaries. These contributions cover various benefits including healthcare, pensions, and work-related injury insurance. The total contribution varies between 10% and 31.125% of the employee's salary depending on factors such as:

• Minimum wage
• UMA (Unidad de Medida y Actualización) - a unit of measure used to calculate social security contributions and other obligations. The UMA value for 2025 is 113.14 MXN daily or 3,445.40 MXN monthly.
• Employee's age
• Industry
• Number of working days per month
• Fringe benefits
• Employer/employee location.

State Payroll Tax

Most Mexican states levy a payroll tax, payable by the employer, which is calculated on the employee's salary. The rate varies by state but is generally low. For example, Mexico City has a 3% payroll tax. Employers are responsible for remitting state payroll taxes monthly.

Deductions

Employees can claim certain deductions to reduce their taxable income. Deductible expenses may include:

• Medical, hospital, and dental expenses
• Medical insurance premiums (limited)
• Retirement annuities (limited)
• Mortgage interest payments
• Charitable donations
• Funeral expenses
• Education expenses.

A general limit applies to most deductions, capped at the lesser of 15% of the employee's annual income or five times the annual UMA. However, deductions for retirement accounts and education expenses have separate limits. Medical expenses, supported by a certificate from a government health institution, are not subject to this general limit. For 2025, the five-times-UMA limit is 206,368 MXN.

Year-End Obligations and Deadlines

Employers must prepare and submit an annual declaration of withheld income tax to the SAT. Employees also receive an annual information return detailing payments and withholdings. Individuals whose income exceeds certain thresholds must file an annual tax return by April 30th of the following year.

Plan Mexico Incentives

The "Plan México" initiative introduced new tax incentives effective January 22, 2025, lasting until September 30, 2030:

• Accelerated Depreciation: Businesses can immediately deduct investments in new fixed assets at rates ranging from 35% to 91% depending on the asset type.
• Training and Innovation Expenses: An additional 25% deduction is available for the increase in training or innovation expenses compared to the average of the previous three fiscal years.

It's important to consult a tax advisor for specific guidance on Mexican tax regulations as they apply to your unique circumstances. As of today, February 5, 2025, regulations for some aspects of Plan Mexico are still pending and are expected by March 23, 2025. This information is current as of today's date and may be subject to change.