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Mexico payroll taxes: wage withholding, IMSS social security, retirement, INFONAVIT housing and the 2026 employer cost

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Last verified: 2026-10-26 · Status: Changing

Employers withhold income tax from wages each month using a progressive tariff from 1.92 to 35 percent and pay it by the 17th of the following month, together with employer social security contributions to the IMSS and the 5 percent housing fund contribution to INFONAVIT. IMSS contributions are calculated on the daily contribution wage, capped at 25 times the UMA (MXN 117.31 a day in 2026) and floored at the minimum wage (MXN 315.04 a day, or MXN 440.87 in the northern border zone), and combine fixed and percentage fees across five insurance branches. The employer's retirement contribution is rising every year to 2030 under the 2020 pension reform; for a worker earning MXN 1,000 a day, total employer contributions are about 22.7 percent of pay in 2026, before state payroll tax.

USD conversions use MXN 18.5026 per US dollar, the US Federal Reserve H.10 noon buying rate in New York for 16 October 2026 (FRED series DEXMXUS), the latest observation available when this page was verified. Mexican tax law uses the Banxico FIX for foreign currency amounts, which differs slightly. Conversions are for orientation only.

Key facts

General minimum wage, daily (2026)	315.04 MXNCONASAMI resolution, DOF 9 December 2025, as of 2026-10-26 · in force
Minimum wage, northern border free zone, daily (2026)	440.87 MXNCONASAMI resolution, DOF 9 December 2025, as of 2026-10-26 · in force
UMA (unit of measure and update), daily value 2026	117.31 MXNUMA 2026 as cited by IMSS agreement ACDO.AS2.HCT.270126/9.P.DIR, as of 2026-10-26 · in force
Social security contribution wage cap	25 times UMA (MXN 2,932.75 a day in 2026) LSS art. 28, as of 2026-10-26 · in force
Top marginal rate of the wage withholding tariff	35 %LISR art. 96, as of 2026-10-26 · in force
Employer retirement contribution	2 %LSS art. 168, section I, as of 2026-10-26 · in force
Employer old age and severance contribution, 2026 range by wage level	3.150 to 7.513 %LSS art. 168 and transitory art. Segundo, DOF 16 December 2020, as of 2026-10-26 · in force
Employer old age and severance contribution, 2030 top rate	11.875 %LSS art. 168, section II, as of 2026-10-26 · in force
Employer housing fund (INFONAVIT) contribution	5 %Ley del INFONAVIT art. 29, section II, as of 2026-10-26 · in force
Work risk premium range	0.5 to 15 %LSS art. 74, as of 2026-10-26 · in force
Employer social security and housing contributions for a worker on MXN 1,000 a day (2026, class I)	22.7 % of wageLSS arts. 25, 73, 106, 107, 147, 168 and 211; Ley del INFONAVIT art. 29, as of 2026-10-26 · in force

The rule

1. Wage withholding. Employers withhold income tax monthly as an advance on the employee's annual tax by applying the monthly tariff in art. 96 to all income of the calendar month; marginal rates run from 1.92 percent to 35 percent on the excess over each bracket's lower limit. No tax is withheld from workers who earn only the general minimum wage. Withholdings are paid by the 17th of the following month. Fees to directors and board members are withheld at no less than the top rate (35 percent) unless there is also an employment relationship.
Cost to do it: The tax is the employee's; the employer's cost is payroll processing and liability for amounts not withheld.
Example: An employee earning MXN 300,000 a month falls in the top bracket, so each additional peso of salary bears 35 percent withholding. / Monthly salary of about USD 16,214; top marginal rate 35 percent at 18.5026.Ley del Impuesto sobre la Renta (LISR), DOF 11 December 2013 (Chamber of Deputies consolidated text, last reform DOF 1 April 2024), Art. 96, 2013-12-11 official text · verified 2026-10-26

2. Contribution base, cap and payment. IMSS contributions are calculated on the daily contribution wage (salario base de cotización), which includes cash pay, bonuses, premiums, commissions and benefits in kind, subject to the exclusions in art. 27. The upper limit is 25 times, and the lower limit the general minimum wage; since 2016, references to the minimum wage as a unit of measure in laws are read as references to the UMA, which for 2026 is MXN 117.31 a day, so the cap is MXN 2,932.75 a day. Employer and worker contributions accrue monthly and the employer must determine and pay them by the 17th of the following month.
Cost to do it: Employer contributions of roughly 20 to 30 percent of covered pay, depending on salary level and risk class.
Example: An executive earning MXN 5,000 a day is covered only up to MXN 2,932.75 a day, so contributions are capped. / Cap of MXN 2,932.75 a day, about USD 158.50, at 18.5026.Ley del Seguro Social (LSS), DOF 21 December 1995 (Chamber of Deputies consolidated text, last reform DOF 15 January 2026), Arts. 27, 28 and 39; CPEUM transitory art. Tercero of the decree of DOF 27 January 2016, 1995-12-21 official text · verified 2026-10-26

3. Sickness and maternity insurance. The employer pays a fixed daily fee per insured worker equal to 20.40 percent of the UMA (13.9 percent in art. 106, raised by 0.65 points a year from 1998 to 2007), plus 1.10 percent of the part of the daily wage that exceeds three UMA (worker 0.40 percent); cash benefits are funded with 1 percent of the wage, 0.70 percent paid by the employer and 0.25 percent by the worker; and medical care for pensioners is funded with 1.5 percent, of which the employer pays 1.05 percent and the worker 0.375 percent.
Cost to do it: 1.75 percent of wage, plus 1.10 percent of the part above three UMA, plus a fixed MXN 23.93 a day per worker in 2026 (20.40 percent of MXN 117.31).
Example: For a worker on MXN 1,000 a day, the employer pays MXN 717.94 a month of fixed fee and MXN 213.86 on the excess over three UMA, plus MXN 210 for cash benefits and MXN 315 for pensioners' care (30 day month). / About USD 79 a month for that worker at 18.5026.Ley del Seguro Social (LSS), DOF 21 December 1995 (Chamber of Deputies consolidated text, last reform DOF 15 January 2026), Arts. 25, 106 and 107; transitory art. Décimo Noveno (1995 law), 1995-12-21 official text · verified 2026-10-26

4. Work risk, disability and life, and day care. The work risk premium depends on the company's risk class: new employers pay the average premium of their class, from 0.54355 percent (class I) to 7.58875 percent (class V); afterwards the premium is adjusted annually by up to 1 point based on the company's accident record, within a minimum of 0.5 percent and a maximum of 15 percent. Disability and life insurance costs 1.75 percent for the employer and 0.625 percent for the worker. Day care and social benefits cost 1 percent, paid entirely by the employer.
Cost to do it: Between about 3.3 and 10.3 percent of wage for a new employer depending on its risk class.
Example: A new office based company in class I pays 0.54355 percent for work risk; a heavy industry company in class V starts at 7.58875 percent. / On USD 1 million of annual payroll, the class I versus class V difference is about USD 70,000 a year.Ley del Seguro Social (LSS), DOF 21 December 1995 (Chamber of Deputies consolidated text, last reform DOF 15 January 2026), Arts. 73, 74, 147 and 211, 1995-12-21 official text · verified 2026-10-26

5. Retirement, old age and severance: employer rates rising to 2030. The employer pays 2 percent of the wage for retirement. For old age and severance (cesantía y vejez) the employer rate depends on the worker's wage in UMA and rises every 1 January from 2023 to 2030: in 2026 it is 3.150 percent for minimum wage earners, 3.676 percent from 1.01 minimum wage to 1.50 UMA, 4.851 percent from 1.51 to 2.00 UMA, 5.556 percent from 2.01 to 2.50, 6.026 percent from 2.51 to 3.00, 6.361 percent from 3.01 to 3.50, 6.613 percent from 3.51 to 4.00 and 7.513 percent above 4.01 UMA, reaching 11.875 percent in 2030. The worker pays 1.125 percent.
Cost to do it: 2 percent plus 3.150 to 7.513 percent of wage in 2026, rising to up to 11.875 percent in 2030.
Example: For a worker on MXN 1,000 a day (8.5 UMA), the employer pays 2 percent retirement (MXN 600 a month) and 7.513 percent old age and severance (MXN 2,253.90 a month) in 2026; in 2027 the second rate rises to 8.603 percent. / About USD 154 a month for that worker in 2026 at 18.5026.Ley del Seguro Social (LSS), DOF 21 December 1995 (Chamber of Deputies consolidated text, last reform DOF 15 January 2026), Art. 168; transitory art. Segundo of the decree of DOF 16 December 2020, 1995-12-21 official text · verified 2026-10-26 · changed: The pension reform published in the DOF on 16 December 2020 raised the employer old age and severance contribution from a flat 3.150 percent to a graduated scale phased in each 1 January from 2023 to 2030; the 2026 rates are the fourth step.

6. Housing fund (INFONAVIT). Employers must register their workers with INFONAVIT and pay 5 percent of the wage into each worker's housing subaccount, and withhold and pay any INFONAVIT mortgage loan repayments of their workers.
Cost to do it: 5 percent of covered wage.
Example: For a worker on MXN 1,000 a day, the employer pays MXN 1,500 a month to INFONAVIT. / About USD 81 a month at 18.5026.Ley del Instituto del Fondo Nacional de la Vivienda para los Trabajadores (Ley del INFONAVIT), DOF 24 April 1972 (Chamber of Deputies consolidated text, last reform DOF 21 February 2025), Arts. 29, section II, and 35, 1972-04-24 official text · verified 2026-10-26

Contribution	MXN per month	USD per month at 18.5026
Sickness and maternity, fixed fee (20.40 percent of UMA per day)	MXN 717.94	USD 38.80
Sickness and maternity, excess over 3 UMA (1.10 percent)	MXN 213.86	USD 11.56
Sickness and maternity, cash benefits (0.70 percent)	MXN 210.00	USD 11.35
Medical care for pensioners (1.05 percent)	MXN 315.00	USD 17.02
Disability and life (1.75 percent)	MXN 525.00	USD 28.37
Day care and social benefits (1 percent)	MXN 300.00	USD 16.21
Work risk, class I average premium (0.54355 percent)	MXN 163.06	USD 8.81
Retirement (2 percent)	MXN 600.00	USD 32.43
Old age and severance, 2026 rate above 4 UMA (7.513 percent)	MXN 2,253.90	USD 121.82
Housing fund INFONAVIT (5 percent)	MXN 1,500.00	USD 81.07
Total employer contributions	MXN 6,798.77	USD 367.45

Employer cost for one worker with a contribution wage of MXN 1,000 a day (MXN 30,000 for a 30 day month), 2026 rates, class I work risk; worker contributions of about MXN 790.27 are withheld separately. State payroll tax (3 percent in Nuevo León, for example) is extra.

Daily contribution wage	2026	2030
Minimum wage	3.150 percent	3.150 percent
1.01 minimum wage to 1.50 UMA	3.676 percent	4.202 percent
1.51 to 2.00 UMA	4.851 percent	6.552 percent
2.01 to 2.50 UMA	5.556 percent	7.962 percent
2.51 to 3.00 UMA	6.026 percent	8.902 percent
3.01 to 3.50 UMA	6.361 percent	9.573 percent
3.51 to 4.00 UMA	6.613 percent	10.077 percent
4.01 UMA and above	7.513 percent	11.875 percent

Employer old age and severance contribution rates by wage level, 2026 and 2030 (LSS art. 168 and 2020 decree transitory table)

Worked example

A Mexican subsidiary hires an engineer with a contribution wage of MXN 1,000 a day (MXN 30,000 a month, about USD 1,621).
Employer IMSS and INFONAVIT contributions total about MXN 6,799 a month (about USD 367), or 22.7 percent of pay, in 2026; the worker's own share of about MXN 790 is withheld from pay.
If the engineer works in Nuevo León, the employer also pays 3 percent state payroll tax, MXN 900 a month. Income tax is withheld from the salary under the art. 96 tariff and paid by the 17th of the following month.
The old age and severance rate for this salary rises from 7.513 percent in 2026 to 11.875 percent in 2030, adding about MXN 1,309 a month by 2030 at today's wage.

Step by step

1. Register the company as an employer with IMSS and INFONAVIT and with the state treasury for payroll tax before the first hire.
2. Register each worker with IMSS when hired and report wage changes; integrate benefits into the daily contribution wage.
3. Determine the company's work risk class and initial premium; review the premium each year based on accidents.
4. Run payroll with the art. 96 tariff and issue payroll CFDI to employees.
5. Pay wage withholdings, IMSS contributions and state payroll tax by the 17th of the following month, and INFONAVIT and retirement contributions on the schedule set by those institutions.
6. Budget for the yearly rise in the employer old age and severance rate through 2030, and for the 10 percent employee profit share covered on the labor page.

Common traps

Paying in kind outside the base. Benefits in kind and most bonuses are part of the contribution wage unless expressly excluded by LSS art. 27.
Using 2025 rates. Employer old age and severance rates change every 1 January until 2030 (2020 decree transitory table).
Underestimating the work risk class. New employers pay the average premium of their class, up to 7.58875 percent for class V (LSS art. 73).
Board fees. Fees to directors without an employment relationship are withheld at no less than the top 35 percent rate (LISR art. 96).

Sources

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