Mexico Income Tax Calculator

Mexico income tax (ISR) uses 11 progressive brackets from 1.92% to 35%. The SAT (Servicio de Administración Tributaria) administers federal income taxes, with most employees having taxes withheld monthly by their employers. A typical professional earning MXN 500,000/year faces a marginal ISR rate of 30% but an effective total rate around 18–22% once IMSS contributions are included.

Understanding Mexico's ISR Tax Brackets

Mexico's progressive tax system means each peso of income is taxed at the rate of the bracket it falls into — not a single flat rate applied to your total. Here is a worked example for a monthly salary of MXN 40,000 (MXN 480,000 annual):

The first MXN 8,952.49 of annual income is taxed at the bracket lower limit rate of 6.4%. The excess of MXN 8,952 (meaning the next portion) is taxed at 10.88% up to MXN 75,984. Then the portion above MXN 75,984 up to MXN 133,536 is taxed at 16%. Income between MXN 133,536 and MXN 155,232 is taxed at 17.92%, and so on up through each bracket. Mexico's tax formula is: tax = lower limit tax amount + (excess over lower limit × marginal rate). This is identical in structure to US federal income tax.

For someone earning MXN 480,000 annually, the ISR lands in the 28% marginal bracket. But because most income was taxed at lower rates, the effective ISR rate is roughly 20–22%. The bracket visualization chart in the calculator shows exactly how your income distributes across all 11 brackets.

ISR vs. IVA: Two Taxes You Need to Know

ISR (Impuesto Sobre la Renta) is income tax — the direct tax on what you earn. Salaried employees have ISR withheld from each paycheck via nómina. Freelancers and self-employed workers in the Régimen Simplificado de Confianza pay ISR quarterly to SAT.

IVA (Impuesto al Valor Agregado) is Mexico's value-added tax, applied at 16% on most goods and services. As an employee, IVA does not affect your payslip — your employer handles it on business transactions. Freelancers invoicing clients must charge IVA on top of their fee and remit it monthly to SAT. For a freelancer billing MXN 50,000/month, the client pays MXN 58,000 (including 16% IVA), but the MXN 8,000 IVA collected goes to SAT, not to the freelancer's income.

Tax Deductions Available in Mexico

Mexico allows personal deductions (deducciones personales) on the annual SAT declaration that can reduce your taxable income. The main categories are:

• Medical expenses: Doctor fees, hospital stays, dental, optical — must be supported by valid CFDI invoices from registered providers
• Education: Private school tuition for children at statutory limits (MXN 12,900–24,500 depending on school level)
• Mortgage interest: Interest payments on your primary residence mortgage from an authorized institution
• Voluntary retirement savings: Up to 10% of annual income (maximum MXN 152,640/year) in Afore voluntary contributions or pension plans
• Donations: To authorized charities (donatarias autorizadas) up to 7% of your prior year income

All deductions together cannot exceed the lesser of MXN 176,877 or 15% of your taxable income — a cap that limits the benefit for very high earners. To claim deductions, you must file an annual SAT declaration (Declaración Anual) by April 30 of the following year.

When to File Your Annual SAT Declaration

Salaried employees are not always required to file an annual declaration. You can skip it if you have a single employer, annual income below MXN 400,000, and no other income sources. However, filing is almost always worthwhile — it allows you to claim personal deductions and recover any overpayment from monthly withholdings. Many employees get a refund simply by filing and declaring legitimate medical and education expenses.

The annual declaration period opens January 1 and closes April 30. SAT provides a pre-filled declaration (Declaración Prellenada) based on CFDI data reported by your employer — you review, add your deductions, and submit. The system is significantly more automated than a decade ago, and most straightforward declarations take under 30 minutes.

ISR Brackets 2026

The first bracket applies 1.92% on the first MXN 8,952 of annual income. The top 35% rate applies only on income above MXN 3,007,804 (~$172K USD). Because Mexico uses progressive brackets — not a flat rate — only the income in each bracket is taxed at that bracket's rate. The bracket visualization chart above shows exactly how your income is distributed across brackets.

IMSS Social Security Contributions

Salaried employees pay four IMSS/Afore contribution streams:

• Enfermedad y Maternidad: 0.375% — healthcare and maternity
• Invalidez y Vida: 0.625% — disability and life insurance
• CEAV Cesantia: 1.125% — old-age and separation benefit
• Afore Retirement: 1.125% — individual retirement account

Employer contributions are significantly higher (~22% of salary) and are informational — they don't reduce your take-home pay but represent your total labor cost to the employer.

Subsidio al Empleo

Mexico provides an employment subsidy (subsidio para el empleo) for lower-income employees earning under approximately MXN 18,674/month. This can fully eliminate ISR for those earning under ~MXN 4,097/month and reduces it on a sliding scale for moderate earners. The calculator applies this subsidy automatically.

Aguinaldo and Prima Vacacional

Mexican law mandates two annual bonuses: the aguinaldo (Christmas bonus) of at least 15 days' salary, and the prima vacacional (vacation premium) of 25% of your vacation pay. These are paid in addition to base salary and increase your total annual compensation — important for understanding your true annual package. Both bonuses are technically subject to partial ISR, but the first MXN 82.22/day is exempt.