Retiring in Mexico
Mexico: the tax picture for FIRE
Mexico taxes resident income on a progressive scale with no tax-free allowance: rates start at 1.92% on the first MXN 10,135 a year and climb through eleven bands to a top rate of 35% above roughly MXN 5.1 million. Our model applies marginal rates only — Mexico's cuota fija (the fixed quota added per band) and IMSS/ISSSTE social security aren't modelled, and the bracket limits are illustrative because SAT revises them yearly. Investment gains on listed shares are taxed at a flat 10% with no annual exemption; real estate and unlisted assets fall in a 25–35% range, which we approximate with a two-slot model.
Under the UK treaty, UK private, occupational and State Pensions are taxed only where you live — Mexico, not the UK. Cost of living is modelled at roughly 48% of UK levels, though that factor is illustrative and low-confidence. Ember doesn't yet carry an estate or inheritance pack for Mexico, so taxes at death aren't modelled, and the income bands are a medium-confidence approximation — verify current-year SAT figures before relying on them.
Income tax (2026)medium confidence
| Band | Rate |
|---|---|
| MX$0 – MX$10,135 | 1.9% |
| MX$10,135 – MX$86,022 | 6.4% |
| MX$86,022 – MX$151,176 | 10.9% |
| MX$151,176 – MX$175,735 | 16% |
| MX$175,735 – MX$210,403 | 17.9% |
| MX$210,403 – MX$424,353 | 21.4% |
| MX$424,353 – MX$668,840 | 23.5% |
| MX$668,840 – MX$1,276,925 | 30% |
| MX$1,276,925 – MX$1,702,567 | 32% |
| MX$1,702,567 – MX$5,107,703 | 34% |
| above MX$5,107,703 | 35% |
What this model doesn’t capture (6)
- cuota fija (fixed quota per band) not modelled — approximation using marginal rate only
- IMSS/ISSSTE social security not modelled
- annual bracket limits are illustrative — SAT updates yearly via DOF; verify current year
- dividends: Mexico's additional 10% final withholding on dividends to resident individuals (post-2013 corporate profits, non-creditable, on top of company-level tax) is not modelled
- pension exemption (Art. 93 fr. IV/V LISR) not modelled — retirement, pension and annuity income is exempt up to 15 UMA/day (2026: ≈ MXN 53,493/month ≈ MXN 642,000/year, aggregate across all pensions; only the excess is taxable). The pack taxes an MX-SOURCE pension on the full tarifa from MXN 0, materially over-taxing MX-source pensioners. FOREIGN pensions are treaty-governed and typically do NOT qualify for this MX exemption (triage 2026-07-22)
- selfEmployment: no regime module — self-employed social contributions / business-income surcharges for this jurisdiction are not modelled
Capital gainsmedium confidence
Capital gains are taxed at 10%–35%.
Listed shares 10% flat; real estate/unlisted 25–35%. Two-slot approximation.
Inheritance & estate taxhigh confidence
No inheritance or estate tax on death transfers.
No inheritance, estate, or gift tax in Mexico — inheritances are ISR-exempt income under Art. 93 Frac. XXII LISR with no cap, and spouse/lineal-relative gifts are also ISR-exempt. Non-resident heirs of Mexican-situs assets face no Mexican death-transfer tax (only transactional notarial/registry fees).
When should you claim your Mexico state pension?high confidence
Mexico Pensión para el Bienestar (Adultos Mayores)
Normal pension age 65. There is no actuarial claiming-age lever — the amount doesn't change with when you claim.
No claiming-age lever: the Pensión para el Bienestar is a universal non-contributory benefit paid from age 65 with no early claim and no deferral uplift. The amount (MXN 6,400 bimonthly in 2026) is set administratively each fiscal year via the Reglas de Operación, not primary statute, and payment requires Mexican residence — it stops for recipients living outside Mexico. The contributory IMSS/AFORE system (Ley 97 individual accounts, Vejez 65 / Cesantía 60, 875-week 2026 minimum rising to 1,000 by 2031, and the pensión garantizada) is a separate scheme and is NOT modelled.
The best age to claim isn’t just about these factors — it depends on your life expectancy, your other income, and which country you’re tax-resident in when the money lands. Deferring into a lower-tax country can flip the answer entirely. Optimise your claim age →
Cost of living
48%
of a UK baseline (100%) — a rough, illustrative comparison, not a forecast.
UK private pension
Under the UK treaty, a UK-sourced private pension paid to a resident here is generally taxed only where you live (not by the UK).
Common questions
How are capital gains taxed in Mexico?
Gains on listed shares are taxed at a flat 10%, with no annual exemption — every peso of gain is taxable. Real estate and unlisted assets are taxed more heavily, in a 25–35% range. Ember models this as a two-slot approximation at medium confidence, so treat the split as indicative rather than exact.
Will my UK pension be taxed in Mexico?
Under the UK–Mexico treaty position in our data, private and occupational pensions and the UK State Pension are taxed only where you live — so as a Mexican resident, Mexico taxes them, not the UK. In Ember's model they then fall under Mexico's progressive bands, which run from 1.92% up to 35% with no tax-free allowance. Note that our model omits the cuota fija fixed quota and social-security contributions, so the modelled tax is an approximation.
Is Mexico cheaper to live in than the UK?
In Ember's model, Mexico carries a cost-of-living factor of 0.48 against a UK baseline of 1.0 — day-to-day spending is modelled at roughly half UK levels, which materially lowers a modelled FIRE number for the same lifestyle. That factor is low-confidence and illustrative, so use it as a rough planning input rather than a budget.
What does Mexico do to your FIRE date?
The free calculator compares your number across every covered country; the full planner models your actual accounts, pensions, residency moves and these exact tax rules — with the maths behind every figure shown.