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Mexico: Living There - Tax Issues

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Last Updated: Dec 05, 2006

Living There

Mexican residents pay income tax on their worldwide income. Foreign individuals are considered residents when they establish a place of abode in Mexico, unless they spend more than 183 days outside Mexico during the calendar year.

Residents are taxed at progressive rates, which are being reduced each year. The top marginal rate for 2005 was 30%, reducing to 29% in 2006, 28% in 2007, and so on.

INCOME TAX RATES 2007

TAXABLE INCOME,MXN (US$) MARGINAL TAX RATE
Up to 5,953 (US$525) 3%
5,953 – 50,525 (US$4,459) 10% on band over US$525
50,525 – 88,793 (US$7,837) 17% on band over US$4,459
17% on band over US$4,459 25% on band over US$7,837
Over 103,218 (US$9,640+) 28% on all income over US$9,640
Source: Global Property Guide

Residents are entitled to allowances and can deduct the following expenses from their taxable income:

  • Medical, dental, and hospital expenses of the taxpayer and his dependents
  • Fees paid on medical insurance
  • Interest expense on mortgage loans
  • Transportation expenses incurred for the travel of the taxpayer’s children to school
  • Funeral expenses for the dependents
  • Gifts to qualified recipients
  • Investments, premiums, and deposits (up to a certain limit)

 

Mexico - more data and information

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