Payroll tax (ISN)
The employer state income tax (Impuesto Sobre Nominas, ISN) is a payroll tax that is levied and administered at state level. It is paid by the employer based on the total compensation that is paid to employees during the month. The tax rate varies based on the state where the wages are paid and can vary from 3.5% to 4% in 2025. Although by 2025, in Mexico City the ISN increased from 3% to 4%, there are some tax benefits; there are incentives for new companies, which within the 1st year of operations will be exempt from said tax. Companies with a maximum ten employees will have a 1% subsidy and those with 11 to 50 employees will receive a 0.5% subsidy.
All employers (individuals or legal entities) are liable to payroll tax from their first payment
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Web page updated on 17 Mar 2025 14:41