Mexico Personal Income Tax Guide 2026

Overview — ISR (Impuesto Sobre la Renta)

The ISR is the primary personal income tax in Mexico, administered by the SAT (Servicio de Administración Tributaria). Every taxpayer is assigned a RFC (Registro Federal de Contribuyentes) which serves as the tax identifier. Mexican tax residents are taxed on their worldwide income, while non-residents are taxed only on Mexican-source income. The tax year runs from 1 January to 31 December, with the annual return (declaración anual) due by 30 April of the following year. Most salaried employees have tax withheld by their employer and may not need to file an annual return unless they have additional income sources.

Personal Income Tax Brackets (2026)

The ISR uses a progressive rate structure with 11 brackets. Rates apply to taxable income after deductions:

• Up to MXN 8,952.49: 1.92%
• MXN 8,952.50 to 75,984.55: 6.40%
• MXN 75,984.56 to 133,536.07: 10.88%
• MXN 133,536.08 to 155,229.80: 16.00%
• MXN 155,229.81 to 185,852.57: 17.92%
• MXN 185,852.58 to 374,837.88: 21.36%
• MXN 374,837.89 to 590,795.99: 23.52%
• MXN 590,796.00 to 1,127,426.84: 30.00%
• MXN 1,127,426.85 to 1,503,902.10: 32.00%
• MXN 1,503,902.11 to 4,558,402.10: 34.00%
• Above MXN 4,558,402.10: 35.00%

Each bracket has a fixed fee (cuota fija) and a marginal rate applied to the excess over the lower bound. The brackets are updated annually by the SAT based on inflation (UMA — Unidad de Medida y Actualización).

Personal Deductions (Deducciones Personales)

Individuals may deduct certain personal expenses, subject to an overall cap. The annual limit for most personal deductions is the lesser of 15% of taxable income or 3 times the annual value of the UMA (approximately MXN 111,000 in 2026, adjusted annually). Qualifying expenses include:

• Medical, dental, and hospital expenses (including health insurance premiums)
• Funeral expenses (up to 1x annual UMA per event)
• Charitable donations (up to 7% of prior year's taxable income)
• Retirement savings (SAR, Afore) contributions
• Mortgage interest on primary residence
• School tuition and transportation (limited to certain levels)
• Eyeglasses and health insurance

Tax Subsidy (Subsidio al Empleo)

The subsidio al empleo is a tax credit available to low-income salaried employees. It effectively reduces or eliminates the ISR liability for workers earning up to approximately MXN 7,382 per month (2026). The subsidy is applied by the employer when withholding monthly taxes and is recalculated during the annual return. Employees earning above the threshold do not qualify, but the subsidy ensures that minimum-wage workers pay little to no income tax.

Filing Requirements

Salaried employees with income from a single employer and no additional income sources are generally exempt from filing an annual return, provided their employer has properly withheld tax. However, an annual return is mandatory if any of the following apply:

• Income from two or more employers (simultaneously)
• Income exceeding MXN 400,000 from a single employer
• Self-employment or business income
• Income from leasing property
• Interest income exceeding MXN 20,000
• Capital gains from sale of assets
• Foreign income exceeding MXN 100,000

The annual return deadline is 30 April of the following year. Monthly provisional returns (declaraciones provisionales) are required for self-employed individuals.

Local Taxes

Mexico does not have a state or municipal income tax. The ISR is a federal tax administered exclusively by the SAT. Some states impose a payroll tax (Impuesto Sobre Nóminas) which is borne by employers at rates typically between 2% and 4%.

FAQs

What is the RFC and how do I obtain one?

The RFC (Registro Federal de Contribuyentes) is the tax ID for all Mexican taxpayers. It is obtained from the SAT by presenting proof of address, identity, and CURP (Clave Única de Registro de Población). Foreign nationals with Mexican tax residency must also register.

Is foreign income taxable in Mexico?

Yes, Mexican tax residents are taxed on worldwide income. A foreign tax credit is available for income taxes paid abroad, limited to the Mexican ISR attributable to that foreign income.

Can married couples file jointly?

Mexico does not permit joint filing for married couples. Each individual must file separately. However, a spouse may deduct certain expenses for the other spouse and dependents.

What happens if I miss the filing deadline?

Late filing incurs penalties and interest. Penalties range from MXN 1,400 to MXN 22,790 depending on the delay and whether the SAT issued a request. Interest accrues monthly at the federal tax rate (recargos).

Disclaimer

This guide provides general information about Mexican personal income tax (ISR) for the 2026 tax year. Tax laws, rates, and UMA values are updated annually and may change. The information is based on published SAT data and may not reflect individual circumstances. Always consult with a qualified Mexican tax advisor (contador) or the SAT directly for advice specific to your situation. InvestmentKit does not provide tax advice.