Mexico expat taxes: Guide for US citizens

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise US Inc. or its affiliates, and it is not intended as a substitute for obtaining business advice from a Certified Public Accountant (CPA) or tax lawyer

Many Americans relocate to Mexico for retirement, to work remotely, or just for a change of pace. You're probably excited to enjoy the beautiful beaches and year-round sunshine, but you may be wondering, "Do expats pay taxes in Mexico?"

The short answer is yes. If you become a Mexican tax resident, you'll owe taxes on your worldwide income. Mexico considers you a tax resident once you spend more than 183 days in the country during any calendar year.¹ Here's everything you need to know.

We'll also introduce the Wise account, which allows you to send, spend, and receive your money across the globe in over 40 currencies – all at the fair mid-market rate.

Learn more 🔎

Table of contents
How much tax do US expats pay in Mexico? Income tax for expats living in Mexico Deductions & allowances for US expats Other taxes in Mexico How to file taxes in Mexico as a US expat: step by step Do I have to pay US taxes if I live in Mexico Need to pay your US taxes as an expat? Expecting a refund from the IRS, but you live abroad? Meet Wise

How much tax do US expats pay in Mexico?

Expat taxes in Mexico depend on your residency status.

Mexican tax residents are required to file returns on their global income, while non-residents only pay taxes on their Mexican-sourced earnings.

You generally qualify as a Mexican tax resident if you spend more than 183 days there in a year.¹ As a tax resident, you'll need to report and pay taxes on income from anywhere in the world. This includes your US salary, investment returns, rental properties, and any other earnings.

Non-residents only owe Mexican taxes if they earn money in Mexico. This applies to foreign workers with Mexican employers and anyone receiving income from Mexican sources, like property rentals or local investments.

💡 Keep in mind that the US taxes its citizens on worldwide income regardless of where they live. This creates potential double taxation scenarios, but the US-Mexico tax treaty typically prevents most people from having to pay taxes in both countries.

Income tax for expats living in Mexico

Mexico uses 2 tests to determine your tax residency status:

• Physical presence test: Staying in Mexico for more than 183 days during any calendar year automatically makes you a tax resident¹ — this includes all days you are present in Mexico, whether you stay continuously or make multiple shorter trips throughout the year

• Economic ties test: Mexico may also consider you a tax resident if you have a permanent home, a business, a job, or immediate family members (like a spouse or children) there

Mexican tax residents face progressive income tax rates that increase with earnings.

Income range (MXN)	Tax rate²
0.01 to 8,952.49	1.92%
8,952.50 to 75,984.55	6.40%
75,984.56 to 133,536.07	10.88%
133,536.08 to 155,229.80	16.00%
155,229.81 to 185,852.57	17.92%
185,852.58 to 374,837.88	21.36%
374,837.89 to 590,795.99	23.52%
590,796.00 to 1,127,926.84	30.00%
1,127,926.85 to 1,503,902.46	32.00%
1,503,902.47 to 4,511,707.37	34.00%
4,511,707.38 and above	35.00%

If you're a non-resident but have Mexican employment income, you'll pay taxes on that income. The tax rates range from 15% to 30%, and the first 125,900 MXN of employment income you receive in 12 months is tax-exempt.³

Taxable income (MXN)	Tax rate³
0 to 125,900	Exempt
125,990 to 1,000,000	15%
1,000,000 and above	30%

Deductions & allowances for US expats

The US-Mexico tax treaty protects most Americans living in Mexico from double taxation, but the IRS has additional tax benefits you may qualify for:

• Foreign Earned Income Exclusion (FEIE): Lets you exclude up to 126,500 USD of foreign income from US taxes for the 2024 tax year (filed in 2025) — this amount adjusts for inflation⁴

• Foreign Tax Credit: Provides dollar-for-dollar credits against your US tax bill for income taxes paid to Mexico

• Foreign Housing Exclusion: Allows you to deduct qualifying foreign housing expenses from your US taxes

💡 Learn more about reporting foreign income on your US taxes in our full guide.

Other taxes in Mexico

The Mexican government doesn't impose inheritance, estate, gift, wealth, or stamp taxes. However, you'll still encounter a few other tax obligations.

Tax type	Rate¹
Capital Gains Tax	Residents: Taxed on worldwide gains, rates vary Non-residents: 25% on gross amount or 30% on net gain from Mexican sources Real estate sales: Extra local tax of 2% to 5% of the transaction
Value-Added Tax (VAT)	16% on most goods and services
Corporate tax	30%
Real estate and rental income taxes	Property taxes vary by region Rental income is subject to income tax plus VAT
Social security	Both employers and employees contribute to the Mexican system

How to file taxes in Mexico as a US expat: step by step

---

Determine your residency and requirements

First, figure out whether Mexico considers you a tax resident or non-resident:

• Tax residents must file returns on their worldwide income

• Non-residents only file if they have Mexican-source income, like rental properties or employment with Mexican companies

You're a Mexican tax resident if you spend more than 183 days in Mexico during the calendar year or have significant economic ties like owning property, running a business, or having family members who are Mexican residents.¹

Get your Mexican tax ID number (RFC)

You'll need a Registro Federal de Contribuyentes (RFC) to file taxes in Mexico. This is your Mexican tax identification number, and you can get it at any Mexican tax office.

Gather your tax documents

Collect all necessary paperwork, including income statements from all sources, bank records, investment documents, receipts for deductible expenses, and any other relevant documents.

If you're a resident, you'll need documentation for both Mexican and foreign income.

Complete and submit your tax return

You can file electronically through the Servicio de Administración Tributaria (SAT) website (which requires a digital signature) or visit a SAT office in person.

The standard deadline is April 30, but electronic filing may give you an extended deadline until May 31.¹

Do I have to pay US taxes if I live in Mexico

Technically, yes. You still owe US taxes even while living in Mexico because the US requires all citizens to file annual tax returns and pay taxes on their worldwide income, regardless of where they live or work.

However, the US-Mexico tax treaty helps minimize double taxation by establishing rules about which country has primary taxing rights for different types of income.

The treaty works alongside IRS benefits like the Foreign Earned Income Exclusion and Foreign Tax Credit to reduce your US tax burden.

However, you're still required to file US tax returns annually and report your foreign bank accounts and assets. Learn more about US taxes while living abroad in our full guide.

Is US social security taxed in Mexico?

The situation with social security between the US and Mexico is a little complicated. While both countries signed a totalization agreement in Guadalajara on June 29, 2004, this agreement hasn't taken effect yet.⁵

A totalization agreement prevents you from paying social security taxes to both countries on the same income. It also allows you to combine work credits from both countries when qualifying for benefits.

However, since the US-Mexico agreement must still be submitted to the US Congress and Mexican Senate for approval before entering into force, it's currently inactive.

This means you may need to contribute to both countries' social security systems if you're working in Mexico. That said, you may be able to claim tax credits on your US return for social security taxes paid to Mexico.

Need to pay your US taxes as an expat? Expecting a refund from the IRS, but you live abroad? Meet Wise

Paying for your US taxes or receiving a tax refund can be tricky — the payment options are often slow and costly, and this doesn’t get better when you’re not in the country and/or you manage different currencies.

Whether you’re a US expat, a resident alien, or you have a foreign business, Wise can be an excellent option. With a Wise account, you can either pay your taxes from abroad or receive your tax refund easily. And if you manage more than one currency, you’ll save a lot on exchange rate markups and conversion fees.

When you fill out your tax forms, use your Wise USD Account and routing number.

🎯 You can find them under “Account Details.” This will let you:
Use direct debit to pay your taxes straight from your Wise account, avoiding the fees from other payment methods offered by the IRS Set up a direct deposit, the fastest way to receive your tax refund, to your Wise USD account details

Wise has no subscription fees or minimum balance requirements, and you can set up an account in minutes.⁶

You can send, receive, hold, and spend your money in multiple currencies, always with the real exchange rate and with just a small and transparent fee.⁷

Get a Wise Account
in minutes 🚀

---

If you spend more than 183 days in Mexico during a calendar year, you become a Mexican tax resident and must pay taxes on your worldwide income.¹

If you don't meet these criteria, you're only taxed on income you earn within Mexico's borders.

The US will also continue taxing your global income, no matter where you live. However, the tax treaty and IRS exclusions can reduce or eliminate double taxation.

Splitting your life between the US and Mexico often involves hidden costs that can add up. Bank transfers between countries typically charge high fees and use poor exchange rates that cost you money on every transaction.

To pay your US or Mexican taxes at the fair mid-market exchange rate, check out Wise.

Sources

1. Greenback Expat Tax Services - Ultimate Tax Guide for US Expats Living in Mexico
2. Servicio de Administración Tributaria - Resolución Fiscal para 2025
3. PWC - Mexico
4. IRS - Figuring the foreign earned income exclusion
5. Social Security Administration - US-Mexican Social Security Agreement
6. Eligibility claim is subject to verification of customers identity
7. Please see Terms of Use for your region or visit Wise Fees & Pricing for the most up to date pricing and fee information

Sources checked 06/05/2025