Mexico
The country profile includes data on the income taxes paid by workers, their social security contributions, the family benefits they receive in the form of cash transfers as well as the social security contributions and payroll taxes paid by the employers. Results reported include the average and marginal tax burdens for eight different family types.
It also describes the personal income tax systems, all compulsory social security contribution schemes and universal cash transfers as well as recent changes in the tax/benefit system.
The national currency is the Mexican Peso (MXN). In 2013, the average exchange rate was MXN 12.77 to USD 1. In the same year, the average worker in Mexico earned MXN 98 921.91.
The Report includes estimates of the tax wedge over the whole of the income distribution ordered by deciles of total labour income of formal wage earners derived from the household surveys.
1. Personal income tax system
The fiscal year for the income tax is the calendar year.
1.1. Central government income tax
The personal income tax is levied on income attained from employment by individuals as wages, salaries, allowances, gratuities, fees and bonuses. Some specific fringe benefits are also taxed in addition to statutory employee profit sharing distributions.
1.1.1. Tax unit
Members of the family are taxed separately.
Mexican resident individuals are taxed on their worldwide income, while non-residents are taxed only on their Mexican-sourced income.
1.1.2. Tax allowances and tax credits
1.1.2.1. Standard tax allowances and tax credits
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Mexico’s labour law establishes a minimum holiday bonus. This bonus amounts to 25% of six days of the worker’s wage with an upper limit equivalent to 15 days of the minimum wage (the minimum wage for the entire country).1
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End of year bonuses up to 30 days of the minimum wage.
1.1.2.2. Main non-standard tax allowances and tax credits
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Compulsory transportation costs.
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Taxpayers can deduct an unlimited amount of medical expenses. Taxpayers may also claim these deductions on behalf of their spouses or dependents if they earn less than the minimum wage of the area in which they reside.
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Complementary contributions to retirement plans are eligible as long as they do not exceed 10% of the taxable income and 5 times the annual minimum wage (MXN 115 194).
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Taxpayers may deduct funeral expenses for the spouse and close relatives up to a maximum of the annual minimum wage of the geographical area where the taxpayer resides.
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Charitable donations to federal, state and municipal governments and non-profit organisations involved in the field of social beneficence, education, culture, research and technology.
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Deposits on special savings accounts and insurance premiums to pension plans for the acquisition of shares of investment societies, as long as they do not exceed MXN 152 000.
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Health insurance premiums for the individual if the beneficiary is the taxpayer, and/or his/her family.
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Deductions of the taxpayer’s personal educational expenses or those of his/her spouse, parents, children, and other close relatives, according to the following table:
1.1.3. Tax schedule
The personal income tax liability was calculated on the taxable income according to the following schedule in 2013:
1.1.4. Employment subsidy credit
An employment subsidy credit is assigned according to the following schedule. It is paid by employers who can credit it against their tax liabilities. This credit is thus a fiscal expense for the government. The amount of the subsidy decreases as earnings increase. No employment subsidy credit was given to workers with annual earnings of over MXN 88 587.97. Employees with an income tax liability that is less than the amount of the credit they are entitled to receive the credit along with their salary. Other workers receiving the credit are entitled to credit it against the calculated income tax.
1.2. State and local taxes
No state or local taxes are levied on wages.
2. Compulsory social security contribution to schemes operated within the government sector
2.1. Employee contributions
Employee social security contributions are levied on gross wages. The upper ceiling for social security contributions was 25 times the minimum legal wage (MXN 70 912.20 per year in 2013) applying in the Federal District of Mexico (MWFD).
2.2. Employer contributions
Employers are required to contribute to the following public programs.
Employer contributions are levied on the payroll. In 2013, there was an upper ceiling of 25 times the MWFD on the wages used to calculate the contributions. The 1.1% contribution for sickness and maternity was levied on wages in excess of 3 times the MWDF.
3. Universal cash transfer
3.1. Amount for spouse and for dependent children
There are no universal cash transfers.
4. Main changes in tax/benefit since 2013
The tax schedule was amended at the upper end of the earnings distribution in 2015 as follows
5. Memorandum items
5.1. Identification of an AW
The data refer to the earnings of workers within the formal sector. The average worker’s wage was calculated using microdata from the national household surveys as well as the average income deciles.
Note
← 1. There are two minimum wages in Mexico: Zone A which is equal to MXN 64.76 per day, which is the minimum wage of the Federal District of Mexico; and Zone B which is equal to MXN 61.38 on a daily basis.