Article
4 min read
Employer Costs for an Employee in Mexico (2026 Guide)
Employer of record
Global hiring
Author
Jemima Owen-Jones
Last Update
February 04, 2026
Quick answer: What is the total employer cost for a $100,000 salary in Mexico?
For an employee earning $100,000 USD annually in Mexico, employers can expect mandatory employer costs of approximately $25,866 USD per year, bringing total compensation costs to $125,866 USD.
Estimated total employer cost (Mexico): ~25.9% on top of gross salary (example estimate).
Hiring in Mexico can be a great way to access skilled talent—whether you’re expanding into Latin America, building a remote team, or hiring your ideal candidate locally.
But even when two employees earn the same salary, the total employer cost varies by country due to statutory contributions, payroll requirements, and mandatory benefits.
This guide provides a ballpark estimate of the mandatory employer cost of hiring an employee in Mexico, using an example salary of $100,000 USD per year.
What’s included in this estimate?
This estimate includes mandatory employer-side statutory costs that may apply when hiring an employee in Mexico, such as:
- Local payroll tax (varies by region/municipality)
- IMSS (Mexican Social Security Institute) contributions
- Occupational risk contributions
- Disability and life insurance contributions
- Nursery and social benefits contributions
- Retirement and old age contributions
- INFONAVIT (mortgage/housing fund) contributions
- Surplus fee for special salary cases (where applicable)
- WFH allowance (where applicable in this estimate)
- Year-end bonus (where applicable in this estimate)
- Vacation bonus (where applicable in this estimate)
What’s not included in this estimate?
This estimate generally does not include additional costs such as:
- Paid annual leave (vacation) beyond what’s included in the estimate
- Sick pay beyond statutory/insured coverage
- Private health insurance (if offered as an additional benefit)
- Employer-provided benefits or allowances beyond those listed
- Bonuses, equity, or commissions outside statutory requirements
- Equipment and onboarding expenses
- Costs that vary by industry, employee category, or city/state rules
Why employer costs vary in Mexico (and globally)
Employer costs can differ depending on:
- Region-specific local payroll tax rates
- Salary thresholds and contribution caps
- Employee classification and benefit eligibility
- Occupational risk category
- Whether the employee receives additional statutory bonuses or allowances
- Changes in regulation year to year
- Currency exchange rate fluctuations (if you pay in a different base currency)
Estimated employer cost breakdown for Mexico
Below is an estimated breakdown of mandatory employer costs for hiring an employee in Mexico earning $100,000 USD/year.
Example salary used in this estimate
- Annual gross salary: $100,000 USD
- Annual gross salary (approx.): $2,066,950 MXN
Employer mandatory costs (estimated)
| Employer Cost Category | Estimated Annual Cost (MXN) | Estimated Annual Cost (USD) | Notes |
|---|---|---|---|
| Local tax | $62,008 | $3,000 | Local payroll tax (varies by region) |
| Social Security IMSS – Fixed amount | $7,725 | $374 | Fixed IMSS contribution |
| Medical Expenses | $9,940 | $481 | Medical expense-related contribution |
| Benefit for disabilities | $6,626 | $321 | Disability support + medical care |
| Occupational risk | $4,733 | $229 | Occupational risk contribution |
| Disablement and Life Insurance | $16,566 | $801 | Insurance for disablement/death |
| Nursery and Social Benefits | $9,466 | $458 | Childcare + social welfare benefits |
| Retirement | $18,933 | $916 | Retirement contribution |
| Retirement and old age | $40,146 | $1,942 | Additional retirement/old age contribution |
| Infonavit (mortgage fund) | $47,331 | $2,290 | Housing credit fund contribution |
| Surplus Fee (extra SS cost for special salaries) | $9,163 | $443 | Extra SS cost for special salaries |
| WFH Allowance | $12,000 | $581 | Remote work allowance (where applicable) |
| Year-End Bonus | $4,167 | $4,167 | Mandatory/expected year-end payment |
| Vacation bonus | $9,863 | $9,863 | Vacation-related bonus |
| Total Estimated Employer Costs | $258,667 | $25,866 | Total mandatory employer cost estimate |
Total compensation cost (salary + mandatory employer costs)
| Total | MXN | USD |
|---|---|---|
| Gross Salary | $2,066,950 | $100,000 |
| Mandatory Employer Costs | $258,667 | $25,866 |
| Total Compensation Cost | $2,325,617 | $125,866 |
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FAQs
What employer contributions are required in Mexico?
Under Mexican labor law and employment law, employers must make mandatory employer contributions such as social security contributions (IMSS), retirement/old-age payments, and INFONAVIT housing fund contributions. These costs are paid in addition to salary and can significantly increase total employer spend.
What are social security contributions in Mexico (IMSS / del Seguro Social)?
Mexico’s social security contributions are paid to IMSS (Instituto Mexicano del Seguro Social / del Seguro Social) and help fund healthcare, maternity, disability, and other protections. Employers are responsible for calculating and paying required IMSS amounts through payroll.
Do state payroll taxes apply in Mexico?
Yes. Many employers pay state payroll taxes (also called state payroll taxes or local payroll taxes), and rates can vary depending on the employee’s state or municipality. This is why employer costs may differ across Mexico even for the same salary.
Is profit sharing mandatory in Mexico?
Yes. Mexico has mandatory profit sharing rules (PTU) under Mexican labor law. Profit sharing can increase annual employment costs and may apply depending on the employer’s structure and eligibility rules.
What is the Christmas bonus in Mexico?
The Christmas bonus (aguinaldo) is a mandatory year-end payment required by law. It is an additional employment cost employers must budget for beyond base salary.
How much paid vacation do employees get in Mexico?
Employees are entitled to paid vacation under Mexican labor law. The number of vacation days increases with seniority, and employers should account for both time off and related vacation payments when budgeting.
Is 20 days per year required in Mexico?
In Mexico, the law requires employers to provide certain minimum leave entitlements and benefits, but “20 days per year” may apply in specific employment situations (such as certain termination or severance-related obligations) rather than being a standard annual vacation entitlement for every employee. The exact requirement depends on the case and employment terms.
Do employers have to provide paid vacation and a vacation bonus?
Yes. Mexican labor law includes paid vacation requirements, and employers may also be required to pay a vacation bonus (prima vacacional), which increases total annual compensation costs.
Can an Employer of Record (EOR) help with legal compliance in Mexico?
Yes. When hiring through an Employer of Record, the EOR acts as the legal employer, managing compliant employment contracts, payroll, statutory filings, and mandatory contributions under Mexican labor law—while your company directs the employee’s day-to-day work.
Jemima is a nomadic writer, journalist, and digital marketer with a decade of experience crafting compelling B2B content for a global audience. She is a strong advocate for equal opportunities and is dedicated to shaping the future of work. At Deel, she specializes in thought-leadership content covering global mobility, cross-border compliance, and workplace culture topics.
