Payroll Compliance and Local Tax Laws in Mexico

By EasyCo Updated October 10, 2026

Running payroll in Mexico means meeting federal labor law, social security rules and state taxes every pay period. Mistakes lead to fines and back payments, so foreign employers usually outsource it. Here is what payroll compliance involves in 2026.

Minimum wage in 2026

From 1 January 2026 the daily minimum wage is MXN 315.04 in most of the country and MXN 440.87 in the Northern Border Free Zone (CONASAMI).

Key components of payroll compliance

Registration: the company registers as an employer with the IMSS and each employee is registered before they start work.
Employment contracts: written contracts under the Federal Labor Law (LFT).
Payroll receipts: every payment is documented with a CFDI payroll receipt.
Records: attendance, payroll and contribution records kept for inspections.

Payroll taxes and contributions

Income tax (ISR)

The employer withholds income tax from salaries each period and pays it to the SAT by the 17th of the following month.

Social security (IMSS, INFONAVIT and SAR)

Employer and employee contributions fund health, disability, retirement and housing. They are calculated on the employee’s integrated daily salary and paid monthly, with housing and retirement contributions paid every two months.

State payroll tax (ISN)

Each state charges its own payroll tax on total salaries, at a rate set by that state.

Mandatory benefits

Christmas bonus (aguinaldo) of at least 15 days’ salary, paid by 20 December
At least 12 days of paid vacation after the first year, rising with seniority, plus a vacation premium of at least 25%
Employee profit sharing (PTU) of 10% of the company’s taxable profit
Severance and seniority payments when the employment ends, as set by the LFT

Outsourcing rules

Since the 2021 reform, a company may not supply its own employees to work for another company’s core business. Payroll outsourcing, where a provider calculates and processes payroll for staff you employ directly, is not affected. See hiring in Mexico and the outsourcing rules.

Best practices

Calculate the integrated daily salary correctly; it drives IMSS contributions.
Reconcile CFDI payroll receipts with tax returns every month.
Update minimum wage and benefit amounts each January.

Get help from Easyco

Easyco coordinates the company setup in Mexico up to the issue of the RFC, and supports companies afterwards with tax, accounting, payroll and company compliance, including a registered office address. Read how to set up a company in Mexico, or contact us to discuss your project.