Mexico Payroll Guide for Foreign Employers

Running payroll in Mexico requires accurate calculation, electronic invoicing and monthly filings with several authorities. This guide walks through the full cycle for foreign employers: calendars, calculations, CFDI, IMSS and year-end obligations.

The payroll calendar

Pay frequency must be at least weekly for manual workers and every fifteen days for other employees; many companies choose biweekly or semimonthly pay. Beyond ordinary payrolls, there are annual events: aguinaldo (by December 20), profit sharing (PTU, by May 30 for corporations) and the annual tax calculation.

Calculating gross pay

Gross pay comprises base salary plus overtime, bonuses, commissions and other benefits. Overtime is paid at double and triple rates within legal limits. Each concept must be mapped to the tax authority's catalog and treated as taxable or exempt according to the law.

Deductions and withholdings

The employer withholds income tax (ISR) using the official tariff, applies the employment subsidy when relevant, deducts the employee share of IMSS contributions and applies any authorized deductions, such as INFONAVIT credit repayments, FONACOT loans or court-ordered alimony. The net amount is paid to the employee.

Electronic payroll receipts (CFDI)

Every payment requires a CFDI payroll receipt, stamped by an authorized provider (PAC). It must show the employee's tax ID, tax regime and postal code exactly as registered, social security data and every earning and deduction with its catalog key. Errors cause rejections, so validate data before stamping.

Filings and payments

Withheld income tax is paid through monthly provisional returns by the 17th of the following month, along with other contributions. IMSS monthly contributions are due by the 17th and retirement and INFONAVIT contributions are paid every two months. State payroll tax follows state calendars. Employee registrations, salary changes and terminations must be reported to IMSS within five business days.

Year-end tasks

Complete the annual payroll tax adjustment where required, issue final CFDIs, update the UMA and minimum wage parameters in the system, review vacation and seniority changes, and run the aguinaldo and PTU payments.

Choose your payroll model

Companies can run payroll in-house with software, use a payroll administration provider for calculation and filings while keeping the employment relationship, or combine both. Evaluate integration with attendance, IDSE and the employee portal, plus support in English if your headquarters need reports.

This article is general information, not legal, tax or accounting advice. Mexican law and tax rules change often: confirm current requirements with a qualified Mexican advisor before making decisions.