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After contributions to social security, retirement, and the national housing fund, the average cost of employer tax rate in Mexico is between 36-44%.
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%.
| 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% |
Employers in Mexico need to make contributions to social security, retirement, and the National Housing Fund.
| Contribution item | Contribution rate |
|---|---|
| Social Security contributions | 24.95% – 33.58% (up to MXN 195,235) |
| Retirement | 5.15% |
| National Housing Fund | 6% |
Employees in Mexico need to make contributions to social security and retirement insurance.
| Contribution item | Contribution rate |
|---|---|
| Social Security contributions | 1.65% |
| Retirement / Old age insurance | 1.125% |
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The tax bureau of Mexico is called the Servicio de Administración Tributaria or SAT.
Yes, in Mexico employers are expected to contribute to social security, retirement, and the National Housing Fund.
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.
Mexico – Individual Income Tax
