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Payroll and benefits guide

Mexico

CapitalMexico City
Fiscal Year1 January - 31 December
Date Formatdd/mm/yyyy
CurrencyMXN (Mexican Peso)
Payroll FrequencySemi-monthly
Employer Taxes~17% – 32%
Employee Costs2.375% – 2.775%

Overview

Languages
Spanish
Income tax
1.92% – 35%
VAT
16%
Reduced rates: 8% (northern and southern border region incentive), 0% (basic food, medicine, exports). Impuesto al Valor Agregado (IVA)

Contributions

Employer

20.40% of UMA
IMSS sickness and maternity (fixed fee)Per worker, calculated on the UMA, not on salary
1.10%
IMSS sickness and maternity (surplus)On salary above 3 UMA
0.70%
IMSS cash benefits
1.05%
IMSS pensioner medical expenses
1.75%
IMSS disability and life
1%
IMSS childcare and social benefits
0.5% – 15%
IMSS occupational riskDepends on the company's risk class and claims history
2%
Retirement (SAR)
3.150% – 7.513%
Old-age and advanced-age unemployment (CEAV)2026 rate rises with salary in UMA multiples
5%
INFONAVIT housing fund
1% – 4%
State payroll tax (ISN)Set by each state; Mexico City charges 4%
~17% – 32%
Total employer cost

Employee

0.40%
IMSS sickness and maternity (surplus)On salary above 3 UMA
0.25%
IMSS cash benefits
0.375%
IMSS pensioner medical expenses
0.625%
IMSS disability and life
1.125%
Old-age and advanced-age unemployment (CEAV)
2.375% – 2.775%
Total employee cost

Authority Payments

Authority Payment
Income tax withholding (ISR)
Paid To
Servicio de Administración Tributaria (SAT)
Due Date
17th of the following month
Method
Monthly electronic return and payment
Authority Payment
IMSS social security
Paid To
Instituto Mexicano del Seguro Social (IMSS)
Due Date
17th of the following month
Method
Calculated through the IMSS SUA/SIPARE system and paid by bank transfer
Authority Payment
Retirement, CEAV, and INFONAVIT
Paid To
IMSS and INFONAVIT
Due Date
17th of the month after each two-month period
Method
Bimonthly payment through SUA/SIPARE
Authority Payment
State payroll tax (ISN)
Paid To
State tax authority
Due Date
Monthly; dates vary by state
Method
State online portal

Minimum Wage & Working Hours

Minimum wage
MXN 315.04 / Daily
Effective 1 January 2026; MXN 440.87 per day in the Northern Border Free Zone
Standard working hours
8 hours per day, 48 hours per week (day shift)
A constitutional reform published on 3 March 2026 cuts the maximum workweek gradually to 40 hours by 2030, starting with 46 hours in 2027. Changes to overtime limits await amendments to the Federal Labor Law
Overtime
The first 9 overtime hours per week are paid at double rate; hours beyond that at triple rate

Leave

  • Annual leave12 days minimum, rising with service12 days in year 1, plus 2 days a year up to 20 days in year 5, then 2 more days every 5 years; a 25% vacation premium applies
  • Sick leaveUp to 52 weeksIMSS pays 60% of the registered salary from day 4
  • Maternity leave12 weeksPaid at 100% by IMSS when contribution requirements are met
  • Paternity leave5 working daysPaid by the employer
  • Public holidays7 daysPlus 1 October every 6 years for the presidential inauguration

Termination

Probation period
Up to 30 days; up to 180 days for management and specialized technical roles
Notice period
No statutory notice; written notice of the dismissal reason is required
Severance pay
Dismissal without cause: 3 months of integrated salary, plus a seniority premium of 12 days per year (salary base capped at 2× minimum wage); 20 days per year may also apply in some cases
13th salary
Mandatory aguinaldo of at least 15 days' pay, due by 20 December
Notes
Accrued vacation, vacation premium, and prorated aguinaldo are always payable

Benefits

  • AguinaldoMandatory

    Year-end bonus of at least 15 days' pay

  • Profit sharing (PTU)Mandatory

    10% of the company's taxable profit, shared with employees each year

  • Grocery vouchers (vales de despensa)Common

    Tax-efficient benefit offered by most employers

  • Major medical insuranceCommon

    Private health cover on top of IMSS

Visas & Work Permits

  • Temporary resident visa with work permit

    Duration
    1 year initially, renewable up to 4 years
    Requirements
    Job offer from an employer registered with the National Migration Institute (INM)

    Application starts at a Mexican consulate abroad

  • Permanent residence

    Available after 4 years of temporary residence; includes the right to work

FAQ

Sources

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