Payroll in Mexico
Get your Mexican payroll's IMSS contributions, aguinaldo, and PTU obligations right from the first payslip, so a routine termination or profit-sharing deadline never turns into a labor claim.
Payroll in Mexico: What You Need to Know
IMSS registration is mandatory for every employer in Mexico, and the total employer contribution burden, IMSS's branches plus INFONAVIT's 5% housing fund, commonly runs 25% to 35% of gross salary depending on the employer's occupational risk class and the employee's salary level. Aguinaldo, 15 days' salary minimum under LFT Article 87, is paid before December 20 each year and prorated for employees with under a year of service. Vacation entitlement doubled under the 2023 reform to LFT Article 76, from 6 to 12 working days in year one, rising by 2 days annually to 20 by year five, with the 25% prima vacacional unchanged on top. Unjustified dismissal under LFT Article 50 triggers 3 months' salary, 20 days per year of service, and a prima de antig眉edad of 12 days per year capped at twice the minimum wage, on top of any proportional benefits owed. PTU, 10% of taxable profit split by days worked and salary proportion, is paid by May 30 for companies and exempt up to 15 UMAs. REPSE registration is required for any specialized-services provider under the 2021 outsourcing reform, since general labor outsourcing for core business activities is banned.
Key Requirements
IMSS registration mandatory for every employer, with total employer contribution burden, IMSS branches plus INFONAVIT's 5% housing fund, commonly running 25% to 35% of gross salary depending on occupational risk class and salary level
Aguinaldo, 15 days' salary minimum under LFT Article 87, paid before December 20 each year, prorated for employees with under a year of service
Vacation entitlement doubled by the 2023 reform to LFT Article 76, from 6 to 12 working days in year one, rising by 2 days annually to 20 by year five, plus the unchanged 25% prima vacacional
Unjustified dismissal under LFT Article 50 triggering 3 months' salary, 20 days per year of service, and a prima de antig眉edad of 12 days per year capped at twice the minimum wage
PTU, 10% of taxable profit split by days worked and salary proportion, paid by May 30 for companies, exempt up to 15 UMAs
REPSE registration required for any specialized-services provider under the 2021 outsourcing reform, since general labor outsourcing for core business activities is banned
Common Challenges
INFONAVIT and IMSS aren't optional benefits, they're a mandatory tax stacked on top of salary
Foreign employers used to lighter payroll-tax models often underestimate the real 25-35% burden IMSS and INFONAVIT add on top of gross salary, distinct from ISR withholding entirely.
PTU is a real annual profit-sharing obligation most foreign employers have never budgeted for
Ten percent of taxable profit must be distributed to employees by May 30, tied directly to the company's own tax return, a genuine surprise for employers with no equivalent obligation at home.
Finiquito and liquidaci贸n aren't interchangeable, and mixing them up creates real exposure
Finiquito settles what's owed regardless of why someone left; liquidaci贸n adds the full Article 50 severance package specifically for unjustified dismissal. Treating every departure like a simple finiquito risks a labor claim.
How NavviPal Helps
IMSS and INFONAVIT registration and contribution calculation, so the real 25-35% payroll burden is budgeted correctly from day one
Aguinaldo, vacation, and prima vacacional processing on their statutory deadlines and formulas
PTU calculation and distribution timed to the company's own tax filing, so the May 30 deadline is never missed
Article 50 severance calculation and finiquito or liquidaci贸n documentation for any termination, unjustified dismissal included
Frequently Asked Questions
What's the real difference between finiquito and liquidaci贸n when an employee leaves in Mexico?
Finiquito settles what's owed regardless of why someone left, unpaid wages, accrued vacation, and proportional benefits. Liquidaci贸n adds the full Article 50 severance package specifically for unjustified dismissal: 3 months' salary, 20 days per year of service, and a prima de antig眉edad of 12 days per year capped at twice the minimum wage. Treating every departure like a simple finiquito risks a labor claim.
How much did vacation entitlement change under Mexico's 2023 labor reform?
Vacation entitlement doubled under the 2023 reform to LFT Article 76, from 6 to 12 working days in year one, rising by 2 days annually to 20 days by year five. The 25% prima vacacional bonus on top of vacation pay was unchanged by the reform.
Is PTU profit-sharing tied to the company's own tax return in Mexico?
Yes. PTU is 10% of taxable profit, split among employees by days worked and salary proportion, and it's calculated directly from the company's own annual tax return. It must be paid by May 30 and is exempt up to 15 UMAs per employee.
Does every service provider a Mexican company uses need to be REPSE-registered?
Only specialized-services providers, not general labor. REPSE registration is required for any specialized-services provider under the 2021 outsourcing reform, since general labor outsourcing for core business activities is banned. Using an unregistered specialized-services provider exposes the contracting company to liability.
What is the real employer payroll burden in Mexico beyond gross salary?
IMSS registration is mandatory for every employer, and the total employer contribution burden, IMSS's branches plus INFONAVIT's 5% housing fund, commonly runs 25% to 35% of gross salary depending on the employer's occupational risk class and the employee's salary level. This is separate from and on top of ISR income tax withholding.
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