Taxes in Mexico
Understanding Mexican taxes is important for legal compliance and financial planning.
Tax Residency
You're a Mexican tax resident if:
- You spend 183+ days in Mexico in a calendar year
- Your center of vital interests is in Mexico (home, family, primary income)
- You're a Mexican citizen (presumed resident unless proven otherwise)
Tax residents pay tax on worldwide income.
Non-residents pay tax only on Mexican-source income.
Income Tax Rates (2026)
Mexican income tax is progressive:
| Annual Income (MXN) | Rate |
|---|---|
| Up to 8,952 | 1.92% |
| 8,953 - 75,984 | 6.4% |
| 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% |
| Over 4,511,707 | 35% |
Other Taxes
| Tax | Rate | Notes |
|---|---|---|
| VAT (IVA) | 16% | On most goods and services |
| Social Security (IMSS) | Varies | If employed by Mexican company |
| State payroll tax | 1-3% | Varies by state |
| Property tax (predial) | 0.1-0.3% | Very low compared to US |
| Capital gains (real estate) | Up to 35% | Complex calculation, exemptions available |
Taxes NOT Imposed
Mexico does NOT have:
- Inheritance tax
- Estate tax
- Gift tax
- Wealth tax
- Stamp duty
This makes Mexico attractive for estate planning.
For US Citizens
You still owe US taxes even while living abroad:
- US taxes citizens on worldwide income regardless of residence
- Foreign Earned Income Exclusion: ~$126,500 (2026) if you qualify
- Foreign Tax Credit for taxes paid to Mexico
- FBAR filing required if foreign accounts exceed $10,000
- FATCA reporting requirements
- US-Mexico tax treaty helps avoid double taxation
Recommended: Work with a tax professional familiar with both US and Mexican taxes.
For Non-US Citizens
- Your home country's rules determine if you owe taxes there
- Mexico has tax treaties with many countries
- Rental income taxed at 21% withholding for non-residents
- Capital gains may be taxable
Practical Considerations
If you're a digital nomad:
- Many don't establish Mexican tax residency (stay under 183 days)
- Others maintain tax residency elsewhere
- This is legally gray - consult a professional
- Mexico's enforcement on foreign income is limited but evolving
Getting an RFC (Tax ID):
- Required for many financial activities
- Can get from SAT (tax authority) with residency
- Process is bureaucratic but doable
Pro Tips
- •183+ days in Mexico makes you a tax resident
- •No inheritance, estate, or wealth taxes in Mexico
- •US citizens still owe US taxes - get professional help
- •Property taxes are extremely low compared to US
- •Get an RFC (tax ID) once you have residency
Have questions about taxes in Mexico?