Working in Mexico City?
Expat Business Info Mexico D.F.
How Much Tax Do You Owe?
Before starting work in Mexico City, you need to register with the Secretaría de Hacienda y Crédito Público, who will supply you with your individual tax ID.
If you’re staying in Mexico for less than half a year (i.e. 180 days), you will be considered a non-resident alien for tax purposes. Any salary you receive from a Mexican employer will then only be subject to a withholding tax, the rates of which depend on your total income. For low incomes, the rate can be as low as 10%, but most expats end up paying around 25% withholding tax.
For residents, on the other hand, including most expats who stay longer than 180 days, the progressive tax rates are as follows, based on your annual income:
- Up to 5,953 MXN: 1.9%
- 5,954–50,525 MXN: 6.4%
- 50,526–88,793 MXN: 10.9%
- 88,794–103,218 MXN: 16.0%
- 103,219–123,580 MXN: 17.9%
- 123,581–249,243 MXN: 21.4%
- 249,244–342,842 MXN: 23.5%
- 342,843 MXN and above: 30.0%
Please note that individuals taxed as residents are taxed on their worldwide income, not only on the income from sources within Mexico. Fortunately, Mexico has signed double taxation treaties with quite a few countries, including, but not limited to, the USA, the UK, Canada, and Germany. If you are receiving income from one of those countries while working in Mexico, you should be able to get tax relief in most cases.
Mexico’s federal states also impose a wage tax on your salaries, which usually goes towards social security. The wage tax rate for Mexico City is 2.5%. This tax is withheld by the employer. All different types of remuneration paid to an employee have to be taken into account when calculating the monthly income tax withholding. Employers have to contribute by paying 2% of payroll to an employee retirement fund and 5% of the payroll to a housing fund.
Private Healthcare or Seguro Popular?
Mexico’s healthcare system consists of both smaller, private systems and larger, universal public schemes. The latter mainly aim to provide basic and affordable healthcare to those in need, and Seguro Popular (Popular Health Insurance), an insurance program initiated in 2004, has since helped Mexico achieve full healthcare coverage. With about 50 million beneficiaries, the scheme provided by the Institute of Social Security is by far the largest. If you opt to be insured in this scheme, part of your monthly salary, depending on how much you earn, will automatically be deducted and channeled into the fund. Your employer contributes a significant amount as well.
Note, however, that the public healthcare system has the obvious downside of only allowing access to public clinics and hospitals, the quality of which can vary greatly. As an alternative, most expats either opt to invest in private healthcare or negotiate a healthcare coverage plan with their employer.
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