Payroll in Mexico

Payroll in Mexico means calculating gross-to-net salary, withholding ISR income tax and the small employee social security share from each worker, paying a large employer social security and housing burden on top, issuing a stamped digital payslip and reporting each run to the tax authority. The key local issue is the CFDI de nomina: every payslip has to be digitally stamped and validated by the tax authority as it is issued, so a payroll run and its electronic receipts are a single inseparable act, not a calculation followed by paperwork.

Total employer cost for a $30,000 monthly salary is about $36,794, around 23% on top of gross.

Our verdict: Fewer than 2 employees and no local entity in Mexico: use an EOR at $199 to $650 per employee per month. At 2 or more, opening a S. de R.L. de C.V. (roughly $13,250 in setup costs and 8 to 14 weeks to complete) usually works out cheaper. Already running a local entity: standard payroll outsourcing is the cheaper route.

Use this page if you already have, or plan to set up, a local entity in Mexico and want to know what running payroll actually involves. If you want to hire in Mexico without becoming the legal employer, an Employer of Record is the faster route.

No local entity yet? See our guide to EOR in Mexico.

Payroll in Mexico at a Glance

How Does Payroll Work in Mexico?

Mexican payroll usually runs bi-weekly, on the quincenal cycle most local staff expect. You calculate each employee’s gross salary, strip out their income tax and small social security share to reach net pay, add a much larger employer social security and housing burden on top, then issue a stamped digital payslip and report the run to the tax authority.

That tax authority is SAT, the Servicio de Administracion Tributaria. It is Mexico’s equivalent of the IRS or HMRC: the body that collects income tax, validates the digital payslips and audits employers when the numbers do not line up. Almost everything in Mexican payroll eventually reports to SAT.

The income tax is ISR, the Impuesto Sobre la Renta. ISR is the federal income tax you withhold from each payslip using a progressive monthly table, so higher pay is taxed at a higher rate as it rises through the bands. You deduct it as you go rather than the employee settling a bill at year end.

Social security runs through IMSS, the Instituto Mexicano del Seguro Social. IMSS is Mexico’s social security institute, funding healthcare, pensions, disability and work-risk cover. It has two sides: a small worker share you withhold, the cuota obrera of roughly 2.6%, and a much larger employer contribution you pay on top.

Two more employer-funded items ride alongside IMSS. INFONAVIT is the national housing fund the employer pays into so workers can access subsidised mortgages, and the impuesto sobre nomina is a state payroll tax of roughly 1% to 3% that varies depending on which Mexican state you employ in.

Contributions are not calculated on raw salary but on the Salario Base de Cotizacion, or SBC, the contribution base that bundles salary and certain benefits. The SBC is capped at 25 UMA, a daily reference unit Mexico uses to set legal limits, so contributions stop climbing once pay passes that ceiling.

Get the ISR table, the SBC base or the state in which you employ wrong and two things break at once: the employee’s take-home pay is incorrect, and your filings to SAT and IMSS no longer match what you paid.

What Payroll Taxes Apply in Mexico?

Three layers of charge sit on every Mexican salary: the employer’s large social security and housing burden, the employee’s small social security share, and ISR income tax. They are calculated in a fixed order, and that order is what makes the gross-to-net result.

Employer Payroll Contributions in Mexico

The employer carries the heavy side in Mexico. Total employer social security runs from 17.40% to 36.14% of the contribution base, covering IMSS branches, the INFONAVIT housing fund and the employer retirement quota, with the rate rising as salary rises within the SBC cap.

On top of that sits the impuesto sobre nomina, the state payroll tax of roughly 1% to 3%, which changes with the state you employ in rather than being set nationally. This is the line most foreign employers underestimate, because it has no equivalent in many home markets.

For budgeting, treat the employer burden as large and state-variable. The total cost of a hire runs well above the headline salary, and the same salary costs you a different amount in Mexico City than in Nuevo Leon because of the state tax.

The true cost of employing in Mexico

Statutory employer rates; items can apply to different wage bases or carry conditions, so lines do not always sum to the total.

A statutory 13th-month payment applies: Minimum 15 days’ salary (Aguinaldo). Payment falls due on December 20. A statutory holiday bonus applies: 25% of daily wages for vacation period (prima vacacional). Statutory profit-sharing applies: PTU (Participación de los Trabajadores en las Utilidades), 10% of taxable income distributed proportionally to employees; mandatory under LFT Art. 117 to 131.

Sources: taxsummaries.pwc.com (employer contributions), payrollmexico.com (bonuses).

Employee Payroll Deductions in Mexico

You withhold a small social security share from the employee, the cuota obrera, totalling about 2.64% of the contribution base. It breaks down into retirement, disability and life, retiree medical, and sickness components, all funding IMSS cover, and it comes off gross pay alongside income tax.

These are the employee’s contributions, but you are responsible for calculating, withholding and remitting them. If your provider miscalculates the worker share, the employee is over or underpaid and your IMSS filing will not reconcile against what you actually paid into the institute.

Income Tax on Salary in Mexico

ISR is collected on a progressive monthly scale that runs from 1.92% at the bottom to 35% at the top, applied band by band rather than as a single rate. You withhold it from each payslip using the official SAT table for the pay period.

At lower incomes a separate item can work the other way. The subsidio para el empleo is a small employment subsidy that tops up the pay of the lowest earners, phasing out as salary rises, so it only affects payroll at the bottom of the scale and not the example below.

Payroll Tax Example: Gross Salary to Net Pay

Here is how the charges stack up for a representative salary. The figures come from the contribution and tax rates above, calculated in the statutory order.

Simplified illustration: Gross of 30,000 pesos a month sits above 4.01 UMA (2026 UMA 3,566.22/month) and below the 25-UMA SBC cap; the example treats SBC = plain gross for simplicity (the legal SBC includes aguinaldo and vacation premium, minimum factor ~1.0452, so employer quotas are understated by roughly 4.5% relative). Employee IMSS 2026: EyM excedente 0.40% x 19,301 (SBC above 3 UMA) = 77 + dinero 0.25% = 75 + GMP 0.375% = 113 + IyV 0.625% = 188 + CEAV 1.125% = 338, total ~790. ISR 2026 uses the 17,533.65 to 35,362.83 band: 1,856.84 + 21.36% x 12,466.35 = 4,519.66, rounded to 4,520; no employment subsidy at this income. Employer 2026 (phase-in CEAV 7.513% at >=4.01 UMA): EyM cuota fija 20.40% of UMA = 728 + excedente 1.10% = 212 + dinero 0.70% = 210 + GMP 1.05% = 315 + IyV 1.75% = 525 + guarderias 1% = 300 + retiro 2% = 600 + CEAV 7.513% = 2,254 + riesgos de trabajo minimum ~0.5% = 150 + INFONAVIT 5% = 1,500, total 6,794 (~22.6% of gross). State payroll tax (about 1-3%) excluded as it varies by state. For 2026 the employment subsidy is 15.02% of the monthly UMA = MXN 536.22/month (15.59% transitional in January 2026), for workers earning no more than MXN 11,492.66/month (DOF 31-Dec-2025); zero above that.

Read the two bold rows together. A worker on $30,000 gross takes home $24,690, while your total cost as employer is $36,794.

The gap on the employee side is modest, because the worker social security share is small and ISR does most of the work. The gap between gross and your cost is the wide one, and it shifts with the state payroll tax, so that is the number to budget on.

What Payroll Filings Are Required in Mexico?

Mexico ties payroll reporting to its electronic invoicing system rather than a single batched return, which is unusual: each pay run produces a stamped digital receipt as it happens. The filing that carries it is the CFDI de nomina, and it is the centre of your compliance cycle.

What the CFDI de Nomina Reports

The CFDI de nomina is the digital payroll receipt, the electronic payslip that has to be stamped and validated by SAT for every employee on every pay run. It records the gross pay, each deduction, the net and the contribution detail, and it is the document SAT and the worker both treat as proof of payment.

Because it is stamped at SAT in real time, it has to reconcile with your actual payroll and your monthly ISR withholding return. A non-stamped payslip is simply non-compliant, with no grace period, which is the single rule foreign employers miss most.

When the CFDI de Nomina Is Due

The CFDI de nomina is stamped at the point of each pay run, and the related filings follow shortly after. The monthly ISR withholding return and contribution payments are due by the 17th of the following month, and the payroll filing falls 3 to 11 business days after the payment date.

Who Files It

The legal obligation sits with the employer. In practice, your payroll provider stamps the CFDI de nomina through an authorised SAT certification provider and submits the ISR return on your behalf, or your in-house team handles it directly if you run your own Mexican entity.

Either way, confirm in writing who stamps the receipts each cycle. The liability for a missed stamp or a late return stays with you as employer regardless of who does the keying.

What Happens If Payroll Filings Are Wrong

The penalty regime stacks three components: fines for failing to file or filing incorrect returns, surcharges charged as monthly interest on unpaid tax, and an inflationary adjustment that revalues the unpaid amount from the due date to the payment date. A payslip that is never stamped is the worst case, because an unstamped CFDI de nomina is not a valid deduction and exposes the whole payroll. Getting the stamping and the ISR right the first time matters more than any single fine suggests.

What Are the Payroll Deadlines in Mexico?

Most Mexican payroll obligations cluster around the monthly ISR return on the 17th, but the CFDI de nomina is the exception that catches people: it is tied to each pay run, not to month end. The IMSS new-hire registration is tighter still, falling within days of the start date.

Late filing: The penalty regime includes three components: 1) Fines (multas) for failure to file or for filing incomplete/incorrect returns. 2) Surcharges (recargos) calculated as a monthly interest rate on unpaid tax amounts. 3) Inflationary adjustments (actualización) to the unpaid amount to account for inflation from the due date to the payment date.

Payroll Operations Risk in Mexico

Employers in Mexico file with 3 separate agencies.

Sources: gob.mx (compliance), banxico.org.mx (payments).

What Is the CFDI de Nomina in Mexico Payroll?

The CFDI de nomina is Mexico’s digital payroll receipt, the stamped electronic payslip that every employer has to issue for each worker on each pay run. It is not just a document you hand the employee; it is validated by SAT at the moment of issue and becomes the official record of the payment.

The stamping rule is the one that catches foreign employers. A payslip that has not been stamped and validated by SAT is non-compliant, and an unstamped receipt cannot be used to support the wage deduction in your corporate tax.

This is why payroll runs and CFDI stamping are inseparable in Mexico. You cannot calculate the run, pay people, and stamp the receipts later as an afterthought, because the stamp is the proof the payment ever happened correctly.

On payslips more broadly, Mexico requires you to issue one to every employee each pay period showing gross pay, each deduction and net pay. When you assess a provider, treat the stamping pipeline as seriously as the calculation: a correct gross-to-net run with a failed or missing CFDI stamp still leaves you exposed.

How Much Does Payroll Outsourcing Cost in Mexico?

There are two separate numbers in Mexican payroll cost, and confusing them is the most common budgeting mistake. The first is your statutory employer cost, which is the 17.40% to 36.14% employer social security plus the state payroll tax.

13 of the 18 EOR providers we track publish Mexico fees; they range from $199 to $650 per employee per month.

Published list prices in USD: EOR fees are per employee per month, contractor fees per contractor per month. Providers that publish neither fee for Mexico are not shown.

According to Whichapp’s July 2026 analysis of EOR fees across 40 countries, providers charge $199 to $650 per employee per month in Mexico.

13 of the 18 providers we track publish Mexico EOR fees. The lowest published rate is $199 per employee per month and the highest is $650.

Contractor management fees in Mexico run from $6 to $49 per contractor per month.

The second is the fee you pay a provider to run the payroll for you. They are unrelated, and only the second is negotiable.

Managed Payroll Provider Fees

Managed payroll in Mexico is normally priced per employee per month, and most providers quote rather than publish a rate. The price turns on headcount, on whether you also need accounting or HR support, and on local complexity such as the CFDI stamping volume, multiple states with different payroll taxes, and the bi-weekly rather than monthly cycle.

The fee buys the calculation, the CFDI de nomina stamping, the ISR return, IMSS filings and payslip production. It does not include the contributions and taxes themselves, which you fund on top, so gather two or three quotes before committing.

What Payroll Provider Fees Usually Include

A standard managed payroll fee in Mexico should cover the gross-to-net calculation, withholding of ISR and the employee IMSS share, CFDI de nomina stamping through an authorised certification provider, IMSS and INFONAVIT filings, and payslips each pay period. Ask for that list in writing. If any of it sits outside the headline fee, you want to know before the first run, not after.

Extra Payroll Costs to Ask About

The gaps tend to appear at the edges of the standard cycle. Ask specifically about the aguinaldo year-end bonus and PTU profit-sharing administration, the state payroll tax in each state you employ in, termination and severance calculations, correction and re-stamping of CFDI receipts when something has to be restated, and onboarding setup fees for taking on your entity. These are the line items that turn a tidy per-head quote into a larger annual number.

When Payroll Outsourcing Becomes Cheaper Than EOR

The choice between running your own payroll and using an EOR is mostly about headcount and how long you plan to stay. An EOR carries a higher monthly fee per person because the provider is the legal employer and absorbs the entity, but it saves you setting one up.

Running your own payroll through a Mexican S. de R.L. is cheaper per head once you are past a handful of employees and committed to staying, because the entity and provider fee spread across more people. In our assessment, the more people you hire and the longer the horizon, the more the economics favour your own entity with outsourced payroll.

Payroll in Mexico vs EOR in Mexico

The line between the two routes is simple: standard payroll assumes you are the legal employer through a Mexican entity, while an EOR makes the provider the legal employer so you do not need one.

Use payroll outsourcing if you already have a local entity or are hiring enough people to justify one. Use an EOR if you need to hire before setting up an entity.

If that second case is you, our guide to EOR in Mexico covers the providers, licensing and costs in full. EOR pricing and provider ranking live there, not on this page.

Best Payroll Providers for Mexico

These providers all run payroll in Mexico, but they are built for different situations. Below is where each one fits and the local point to check before you sign. We do not list EOR prices here; for unpriced managed payroll, treat the fee as by quote and confirm it during your shortlist calls.

4 providers in Whichapp’s independent index cover Mexico. The top 4 by composite score:

1. Deel (9.1/10). From $599/month. Best for scale, automation and contractor volume. Runs its own Mexico entity.
2. Papaya Global (8.2/10). From $650/month. Best for multinational payroll consolidation. Serves Mexico through a partner.
3. Remote (8.0/10). From $599/month. Best for IP protection and owned-entity purity. Runs its own Mexico entity.
4. Rippling (6.4/10). Best for unified IT, HR, and global finance. Runs its own Mexico entity.

Rankings come straight from Whichapp’s provider index (coverage 30%, pricing transparency 25%, security and compliance 25%, integration depth 20%); see how we score.

Only 3 of 4 major EORs run their own Mexico entity; 1 more serves it via a partner.

Entity model as reported on provider websites, last checked 2026-06-06. An own entity means the provider is the direct legal employer; a partner model adds a third party to the chain.

Deel for Payroll in Mexico

Deel is a strong fit if Mexico sits alongside other Latin American or international hires you want on one platform, with a single dashboard and API across markets. Mexico watch-out: confirm it stamps the CFDI de nomina through an authorised SAT certification provider directly rather than handing it to a third party, and that IMSS alta registration runs inside the platform. Read our Deel review.

Remote for Payroll in Mexico

Remote runs much of its payroll through owned entities, which gives a cleaner compliance chain than a partner-network model. That suits employers who want a direct line of accountability for CFDI stamping and IMSS filings.

Mexico watch-out: confirm Mexican payroll is on Remote’s own entity rather than a local partner, and that the state payroll tax for the state you employ in is handled inside the platform. Read our Remote review.

Papaya Global for Payroll in Mexico

Papaya Global is built for consolidating payroll across many countries with finance-grade reporting and audit trails, so it earns its place when Mexico is one market in a larger stack. Its weakness is the opposite case: for a single Mexican entity with no multi-country reporting need, the platform is heavier than the job requires.

Mexico watch-out: Papaya leans on local partners in some markets, so confirm whether your Mexican payroll runs on its own engine or a third-party bureau, and how directly it owns the CFDI de nomina stamping. Read our Papaya Global review.

Rippling for Payroll in Mexico

Rippling appeals when you want payroll wired into the same system as HR, IT and device management, with automated journal entries. Mexico watch-out: it is platform-first, so confirm the depth of its Mexican statutory handling, specifically the ISR table, the SBC contribution base and CFDI stamping, against what a local payroll specialist would offer. Read our Rippling review.

Multiplier for Payroll in Mexico

Multiplier is the value option for multi-country payroll where price predictability matters, which fits smaller Mexican teams. The trade-off for that price is depth: in tightly regulated areas it tends to carry less local specialist weight than a Mexico-focused bureau.

Mexico watch-out: confirm it stamps the CFDI de nomina and handles IMSS and INFONAVIT filings directly rather than through a reseller, and that its gross-to-net engine models the ISR table and the SBC cap accurately before you anchor any salary offers on it. Read our Multiplier review.

Safeguard Global for Payroll in Mexico

Safeguard Global is a payroll-led specialist rather than an HR platform with payroll bolted on, which appeals when running the payroll correctly is the whole point and you do not need a wider people stack. That focus is also its limit: if you want integrated HR, devices and onboarding in one tool, it does less than Rippling or Deel.

Mexico watch-out: confirm its Mexican coverage is run in-house rather than subcontracted, and that the service includes CFDI stamping and SAT correspondence, not just the monthly calculation. Read our Safeguard Global review.

How to Choose a Payroll Provider in Mexico

The questions below separate a provider that genuinely runs Mexican payroll from one that resells a local bureau without owning the detail. Ask them before you sign, not after the first run.

Can They Stamp the CFDI de Nomina?

Confirm the provider stamps the digital payroll receipt through an authorised SAT certification provider for every employee on every run, and that it reconciles the receipts against the actual payroll and the monthly ISR return. Ask who stamps and by when each cycle.

Do They Manage IMSS Registration?

Check that new-hire registration, the IMSS alta, is filed within the statutory window of the start date, and that IMSS and INFONAVIT contributions are calculated on the correct SBC base. A provider that treats IMSS as a bolt-on leaves you exposed on a separate compliance regime from the tax side.

Can They Model Gross-to-Net Salary Accurately?

Mexico’s progressive ISR table and the SBC contribution cap mean a net-pay request does not translate into a simple flat gross. A capable provider models gross-to-net both ways, including the state payroll tax, and helps you frame offers rather than just processing whatever number you hand over.

How Do They Update for Payroll Law Changes?

Mexican ISR tables, the UMA reference value and state payroll taxes change at least annually. Ask how the provider tracks SAT and state changes and how quickly updates reach your payroll runs.

Who Is Liable for Payroll Errors?

The statutory liability stays with you as employer, but the contract should set out what the provider is accountable for if a miscalculation, a missed stamp or a late filing is their fault. Get the indemnity and correction process in writing.

Can They Support Multi-Country Reporting?

If Mexico is one of several markets, confirm the provider can consolidate reporting across them in a single view, so your finance team is not stitching country files together by hand.

What Support Do They Offer During Terminations or Audits?

Terminations and SAT or IMSS queries are where weak providers show their limits. Ask what support you get during a severance calculation or an audit, and whether a named contact handles it or you are routed through a ticket queue.

What Does Terminating an Employee Cost in Mexico?

Severance: Termination without cause (LFT Art.48/50): 3 months of integrated daily salary (90 days) + 20 days of integrated daily salary per year of service + a 12-day/year seniority premium (prima de antiguedad, base capped at 2x the minimum daily wage). Accrues from day one.

Statutory leave: 12 days of paid annual leave plus 7 public holidays a year.

Sources: diputados.gob.mx (severance), gob.mx (leave).

Mexico Payroll Checklist Before Hiring

• Confirm whether you need payroll or an EOR
• Check your local entity status
• Model gross-to-net salary for your offers
• Confirm employer contribution rate (employer social security)
• Confirm employee deductions (Retirement (CEAV), Disability and life, Retiree medical, Sickness cash benefit, Sickness in-kind (excess))
• Confirm income tax treatment
• Check who files CFDI nomina + ISR and by when
• Confirm IMSS alta registration is handled
• Confirm the payslip process
• Check leave, sick pay and termination workflows
• Ask who carries liability for calculation errors
• Confirm provider pricing and any extra fees

Work through this before your first hire. The CFDI stamping at point seven is the one foreign employers miss most often, because an unstamped payslip is non-compliant from the moment the run is paid.

FAQs About Payroll in Mexico

Methodology and Disclosure

The contribution rates, ISR bands, SBC and UMA caps, filing deadlines and penalty regime on this page come from Whichapp’s Mexico statutory dataset, grounded in the Ley del Seguro Social, SAT ISR withholding tables and CFDI de nomina stamping rules, and refreshed as rates change. The worked example is calculated from those rates and reconciles by construction.

Provider assessments reflect our independent editorial view of payroll fit for Mexico; we do not sell payroll, EOR or contractor services. Some provider links may carry affiliate referrals, which never affects our editorial judgement or the figures above.

Already hiring contractors instead of employees? See contractor management in Mexico, or start from the Mexico hiring hub for the full picture.

Primary sources

• Income tax and employee contributions: taxsummaries.pwc.com
• Employer contributions: taxsummaries.pwc.com
• Minimum wage: gob.mx
• Payroll filing deadlines: diputados.gob.mx
• Notice periods and leave: gob.mx
• Severance rules: diputados.gob.mx
• Entity setup benchmark: gob.mx