Individual Tax Rates On Personal Income in Mexico

Individual Tax Rates on Personal Income in Mexico: The Resident people are direct to Mexican income tax on their global income, despite their nationality. The Non-residents, such as Mexican resident who can verify residence for tax objectives in a foreign country, are imposed only on their source income in Mexico.

The Tax Rate of Personal Income in Mexico

The following tax rates are essential for residents for the calendar year 2020.

MXN (taxable income) Basic tax
From To  Tax on the first column (MXN)  Tax percentage on excess 
0.01 6,942.36 0 1.92
6,942.36 58,922.28 133.28 6.40
58,922.28 103,550.52 3,460.01 10.88
103,550.52 120,372.96 8,315.57 16.00
120,372.96 144,119.40 11,007.14 17.92
144,119.40 290,667.84 15,262.49 21.36
290,667.84 458,132.40 46,565.26 23.52
458,132.40 874,650.11 85,952.92 30.00
874,650.11 1,166,200.08 210,908.23 32.00
1,166,200.08 3,498,600.13 304,204.21 34.00
3,498,600.13 and above 1,097,220.1 35.00

If an individual is regarded as a non-resident for tax objectives in Mexico, the tax rate suitable to compensation will change from 15 per cent to 30 per cent. The initial MXN 125,900 of the active income received in a twelve-month floating interval will be tax-exempt.

The table listed below applies to the income tax concerning the earned income by non-residents for the current year 2020:

MXN (taxable income) Percentage of tax rate
Over Not over
0 125,900 Exempt
125,900 1,000,000 15
1,000,000 and above 30

Non-residents are direct to WHTs (withholding taxes) on the Mexican source income at the rate changing from 0 per cent to 30 per cent, depending on various factors. Non-residents are direct to Mexican tax on profits arising from selling of real property in Mexico (it includes stocks of foreign firms holding a notable amount of real property in Mexico). Along with this it also includes gains on the selling of stocks of Mexican firms outside the MSE (Mexican stock exchange). Usually, when a capital profit is directed to tax, the non-resident trader can choose to pay either 30% of the aggregate gain or a flat rate of about 25% of the net proceeds. Sales of stocks in the Median stock exchange are directed to a straight 10% tax withholding.

Other kinds of Mexican-source income such as royalties and rents are also subject to withholding tax when paid or given to a non-resident. In the case of corporate distributions or other dividends from Mexican firms, since 2014, there is about 10 per cent withholding on the dividends corporate gains produced after the year 2013.

The Local Income Tax Rate

Since 2005, Mexican cities are allowed to estimate an income tax rate on individuals for specific income things such as real estate sales, professional fees and rental income etc. Very few cities have passed various laws to tax the income.

The Bottom Line

Many investors are not aware of the tax rates that government charges on personal income. Tax is an essential part of individual life, and it is his right to know what percentage of his income goes in tax and for what purpose the government uses it.