Mexico sits 159th out of 217 in our world ranking, with a FiScore of 4.2 out of 10. A scale reaching 35%, corporate tax at 30%, VAT at 16%: on ordinary rates it is not a low-tax country.
It has become one of the most popular destinations for American remote workers anyway, and there is a regime behind that. There is also a trap behind the regime.
RESICO, the regime everyone talks about
The Régimen Simplificado de Confianza is a simplified regime for individuals with annual receipts up to 3.5 million pesos, taxed at 1% to 2.5% on amounts actually collected.
One to two and a half percent. The 2026 rates are unchanged from 2025.
For a freelancer or a small consultancy invoicing in Mexico, that is genuinely low, and the compliance burden is light by Mexican standards. This is why RESICO appears in every guide about working from Mexico.
The trap, stated plainly
RESICO does not shelter foreign income.
Once you are a Mexican tax resident, Mexico taxes your worldwide income. It makes no difference whether the money stays in a foreign bank account, is paid by a foreign company, or never touches Mexico at all. The obligation comes from residence, not from where the funds sit.
RESICO is a simplified way of paying tax on income you declare in Mexico. It is not a territorial regime and it is not a shield. Reading it as one is the single most common mistake made about Mexican tax, and enforcement has been tightening.
Residence is not a simple day count
Mexico looks first at where your home and centre of vital interests are, and secondarily at the 183-day threshold.
That matters because someone can become a Mexican tax resident with fewer days than they expect, by establishing a home, a family life and economic ties. It also means someone who spends six months a year in Mexico but keeps their life elsewhere may not be resident. The test is qualitative before it is arithmetic.
If you are American
Mexico is the most common destination for American expatriates, and the arithmetic is better than in a zero-tax jurisdiction.
Citizenship-based taxation still applies, but Mexico actually taxes you, which generates a real foreign tax credit against your US liability. Combined with the US-Mexico treaty and the foreign earned income exclusion, the outcome is often manageable.
The complication is RESICO: a 1% to 2.5% Mexican rate produces very little credit, so a low Mexican bill can mean a high US one. Some Americans are better off outside RESICO. That is a calculation, not a rule of thumb.
The rates
| Tax | Rate |
|---|---|
| Personal income | 1.92 to 35% |
| RESICO, individuals | 1 to 2.5% |
| Corporate | 30% |
| VAT | 16% |
The drawbacks
Worldwide taxation on residents, which is the main one.
Security varies enormously by state, and the national picture is not the local picture in either direction.
Bureaucracy is heavy, and obtaining an RFC tax number and keeping electronic invoicing compliant takes local help.
Enforcement is tightening on foreigners who spend long periods in Mexico without registering.
So, who is Mexico for?
- A freelancer invoicing Mexican clients: RESICO is excellent and simple.
- An American wanting proximity, climate and a real treaty: a strong case, and better than the Gulf on credits.
- Someone hoping to keep foreign income out of scope: no. Residence pulls it in.
- Someone wanting territorial treatment nearby: look at Panama or Costa Rica.
The full table of Mexican rates is on our Mexico page, and the comparison tool puts it next to anywhere else.
Sources
Figures verified in August 2026 against the SAT, Annex 8 of the RMF 2026 and PwC Tax Summaries. An error reported to us gets fixed.
This page informs, it does not advise. Before deciding anything, talk to a professional who will look at your situation, as our terms of use set out.