Resident individuals are subject to Mexican income tax on their worldwide income, regardless of their nationality. Non-residents, including Mexican citizens who can prove residence for tax purposes in a foreign country, are taxed only on their Mexican-source income.
Personal income tax rates
The following tax rates are effective for resident individuals for calendar year 2021:
|Taxable income (MXN)||Basic tax|
|Over||Not over||Tax on column 1 (MXN)||Tax on excess (%)|
If the employee is considered a non-resident for Mexican tax purposes, the tax rate applicable to compensation will vary from 15% to 30%. The first MXN 125,900 of employment income received in a 12-month floating period will be tax exempt.
The following tax table is applicable to income tax with respect to income earned by non-residents for the calendar year 2021:
|Taxable income (MXN)||Tax rate (%)|
Non-residents are subject to withholding taxes (WHTs) on Mexican-source interest income at rates varying from 0% to 30%, depending on several factors. Non-residents are subject to Mexican tax on gains arising from sales of real property located in Mexico (including shares of foreign companies holding a significant amount of Mexican real property) as well as the sale of shares of Mexican companies outside the Mexican stock exchange. Generally, when a capital gain is subject to tax, the non-resident investor can elect to pay either a flat rate of 25% of the gross proceeds or 30% of the net gain. Sales of shares in the Mexican stock exchange are subject to a flat 10% tax withholding. Other types of Mexican-source income (including rents and royalties) are also subject to WHTs when paid to a non-resident. In the case of dividends and other corporate distributions from Mexican companies, since 2014, there is a 10% tax withholding on the dividends from corporate profits generated after 2013.
Local income taxes
Since 2005, Mexican states are permitted to assess an income tax on individuals for certain income items such as professional fees, rental income, real estate sales, etc. Very few states have passed laws to tax this income.