Payroll Withholding in Mexico

Source-cited draft. Built from the Cámara de Diputados consolidated text of the Ley del Impuesto Sobre la Renta (LISR, last reform DOF 01-04-2024), Title IV Chapter I, read on 2026-10-28. No accountant has reviewed it. Do not run a payroll from it without review by a qualified Mexican professional.

Tax year: the calendar year. Currency: Mexican peso (MXN). The Servicio de Administración Tributaria (SAT) administers ISR and publishes the withholding tariffs.

See also: mx-social-contributions (IMSS, INFONAVIT, PTU), mx-income-tax, mx-cross-border.

Who this applies to

Any employer that pays wages withholds ISR each calendar month (LISR Art. 96) by applying the SAT monthly tariff: cuota fija plus the marginal rate on the excess over the bracket floor. The withholding is a provisional payment on account of the worker's annual ISR (Art. 96). The employer does not make the annual calculation for a worker whose wages for the year exceed MXN 400,000 (Art. 97, last paragraph, item (b)); such a worker files their own annual return (Art. 150).

Rates, bands and thresholds

Item	Rate or amount	Tax year	Source
Monthly wage withholding	SAT monthly tariff for 2026: 1.92% from MXN 0.01 rising to 35% over MXN 425,642.00 a month (cuota fija MXN 133,488.54 on the top band); full table in RMF 2026 Anexo 8, A.V	2026	LISR Art. 96; RMF 2026 Anexo 8
Aguinaldo and other year-end bonuses paid to all staff	Exempt up to 30 days of the general minimum wage of the worker's area; the rest taxed	2026	LISR Art. 93 fr. XIV
PTU (employee profit share)	Exempt up to 15 days of the general minimum wage of the worker's area; the rest taxed	2026	LISR Art. 93 fr. XIV
Prima vacacional paid to all staff	Exempt up to 15 days of the general minimum wage of the worker's area	2026	LISR Art. 93 fr. XIV
Wages above which the employer does not make the annual calculation	MXN 400,000 a year	2026	LISR Art. 97, last paragraph, item (b)
Payment to a non-resident for services performed in Mexico	25% of the gross, no deductions	2026	LISR Art. 156

The taxable base

Taxable payroll includes wages, seniority premiums, aguinaldo, bonuses and cash allowances (Art. 94). Exempt items include the Art. 93 fr. XIV amounts above and savings-fund contributions within limits (Art. 93). Withholding is computed per calendar month (Art. 96).

Deadlines and filing

Obligation	Deadline	Source
Payment of tax withheld from wages	By the 17th of the following month	LISR Art. 96
Annual calculation for employees, and payment of any difference	By February of the following year	LISR Art. 97
Employee annual return (when obliged)	During April of the following year	LISR Art. 150

Penalties and interest

No penalty or interest figure in this domain is confirmed yet; see the "Not yet confirmed" line under Sources.

Cross-border points

• Payments to non-resident individuals for personal services performed in Mexico bear 25% on the gross, withheld by the Mexican payer. Services are presumed wholly performed in Mexico once part is performed there, and payments by a Mexican resident to a foreign related party are presumed Mexican-source (LISR Art. 156). A payer that quotes the fee net grosses it up (example 2).

Worked examples

Worked example 1: monthly withholding on a MXN 25,000 salary (2026 tariff)

The 2026 monthly Art. 96 tariff (RMF 2026 Anexo 8, A.V) puts MXN 25,000 in the band from MXN 17,533.65 to 35,362.83: cuota fija MXN 1,856.84 plus 21.36% on the excess. The excess is MXN 7,466.35 and the withholding MXN 3,451.65. (v0.2 used the 2025 band, floor 15,487.72 and cuota 1,640.18, giving MXN 3,672.00; that is the 2025 figure, not 2026.)

name: monthly ISR withholding 25000 salary 2026 tariff
inputs:
  salario: 25000
  limite_inferior: 17533.65
  cuota_fija: 1856.84
  tasa_marginal: 0.2136
steps:
  - excedente: salario - limite_inferior
  - impuesto_mensual: cuota_fija + excedente * tasa_marginal
expected:
  excedente: 7466.35
  impuesto_mensual: 3451.65

Worked example 2: non-resident instructor paid net

An employer pays a non-resident instructor MXN 80,000 net for a Mexico City course (Art. 156, 25% on gross; the payer grosses up): gross fee MXN 106,666.67, withholding MXN 26,666.67.

name: gross-up of non-resident services 25 percent rate
inputs:
  fee_neta: 80000
  tasa: 0.25
steps:
  - fee_bruta: fee_neta / (1 - tasa)
  - retencion: fee_bruta * tasa
expected:
  fee_bruta: 106666.67
  retencion: 26666.67

Ask the client first

1. Is the current SAT tariff loaded in payroll for the year being run?
2. Are exempt items coded correctly (aguinaldo up to 30 days and PTU up to 15 days of minimum wage, savings-fund contributions)?
3. Will any employee earn more than MXN 400,000 this year? You do not make that worker's annual calculation.
4. Any foreign instructors or contractors paid net? The 25% Title V withholding has to be grossed up.
5. Is the February annual calculation calendared?

Sources

Source	URL	Read on
Ley del Impuesto Sobre la Renta, consolidated (Cámara de Diputados, last reform DOF 01-04-2024), Arts. 93, 94, 96, 97, 150, 156	https://www.diputados.gob.mx/LeyesBiblio/pdf/LISR.pdf	2026-10-28
SAT, Resolución Miscelánea Fiscal 2026, Anexo 8 (DOF 28-12-2025), monthly Art. 96 tariff for 2026 (A.V); read from the Internet Archive copy	https://dof.gob.mx/nota_detalle.php?codigo=5777219&fecha=28/12/2025	2026-10-29
SAT, Resolución Miscelánea Fiscal 2025, Anexo 8 (ISR tariffs for 2025)	http://omawww.sat.gob.mx/normatividad_RMF_RGCE/Paginas/documentos2025/rmf/anexos/Anexo8_RMF2025-30122024.pdf	2026-10-28

Not yet confirmed: whether the minimum-wage references in LISR Art. 93 fr. XIV are read as the UMA (the law text says salario mínimo); aguinaldo of at least 15 days' wages (LFT Art. 87; no archived copy of the LFT); PTU being taxed at the annual tariff rather than through the payroll tables (earlier drafts cited LISR Art. 98); proration rules for multi-month or irregular payments (earlier drafts cited Arts. 96, 106); the worker's annual-return thresholds as they apply in 2026; earlier drafts' rule that a seconded employee becomes Mexican resident after 183 days (cited as Art. 9; the 183-day test found in the text read is the construction-PE rule in Art. 2); Código Fiscal de la Federación penalties of 45%-85% and 50%-150% (Arts. 64-65), updating and interest (Art. 20) and the employer's joint liability for ISR withheld but not paid (the archived consolidated CFF read 2026-10-31 shows Art. 64 repealed and the Art. 76 omission fine at 55%-75%; the 45%-85% and 50%-150% figures were not read verbatim); savings-fund exemption limits for 2026.