Overview: Do Expats Pay Taxes in Mexico?
- Yes — U.S. citizens or other foreigners living in Mexico may owe Mexican taxes depending on their residency status. Residents are taxed on worldwide income; non-residents are taxed only on their Mexican-sourced income.
- You typically become a Mexican tax resident if you spend more than 183 days in Mexico in a calendar year, or establish strong economic/family ties there (house, business, dependents) — these are part of the “physical presence” or “center of vital interests” tests.
Income Tax Rates & Who Pays What
| Status | What Income Is Taxable | Approximate Tax Brackets / Rates* |
|---|---|---|
| Mexican Tax Resident | All income, whether from Mexico or abroad | Progressive rates from ~1.92% up to ~35% depending on income levels. |
| Non-Resident | Only income sourced in Mexico (employment in Mexico, Mexican investments, rental income in Mexico, etc.) | Rates ~15%–30% for Mexican-sourced income beyond certain thresholds. First MXN 125,900 of some income may be exempt. |
*Rates and brackets are subject to updates and depend on income type, deductions, state/municipality, etc.
Double Taxation & U.S. Tax Obligations
- U.S. citizens (and green card holders) must still file U.S. federal tax returns, reporting worldwide income, even while living abroad.
- To avoid paying taxes twice on the same income, they can use treaty benefits, Foreign Tax Credit (FTCs), Foreign Earned Income Exclusion (FEIE), and housing deductions/exclusions.
Filing & Other Tax Types
- Must obtain a Mexican tax identification number (RFC) to file Mexican tax returns.
- Mexican tax year is January 1 – December 31; returns generally due April 30.
- Other taxes you may face:
- VAT (value-added tax) on most goods & services (~16%)
- Taxes on capital gains, rental income, property, etc.
How Dogpay Helps U.S. Expats with Tax Payments & Financial Clarity
Here are ways Dogpay can make life easier when dealing with expat taxes, paying cross-border or foreign income, and keeping your finances organized:
| Scenario | Common Pain Points / Financial Frictions | How Dogpay Adds Value |
|---|---|---|
| Paying Mexican taxes / withholding | You may need to pay tax liabilities in pesos as non-resident or as resident; if your income or source is outside Mexico, converting currency or doing foreign bank transfers may incur high fees or delays. | Dogpay supports multi-currency payment and transfers; you can convert with transparent rates; send payments on time; reduce hidden fees; track exchange costs. |
| Reporting foreign income & U.S. tax filing | Gathering proofs/receipts of foreign earnings, lodging payments in foreign currency; risk of losing money on currency conversion or bank fees; need good transaction history for IRS / SAT audits. | Dogpay gives clear transaction logs, exportable statements; helps you keep all receipts; track payments & conversions, which is helpful when claiming FEIE / FTC or providing documentation. |
| Cross-border asset income / investments (rentals, dividends, etc.) | Income from Mexican real estate, local investments, or foreign investments must be reported; paying associated taxes or receiving dividends may involve foreign currency transfers, withholding, and delay. | Using Dogpay helps to manage those cross-border payments or remittances; minimize currency loss; ensure money moves reliably; help record withholding amounts; simplify net receipts. |
| Paying for tax advisory / legal / translation / documentation | You’ll often need accountants, translators, or legal help to file in Mexico and U.S.; paying for those services from abroad or to foreign providers may be costly, have hidden bank or FX fees. | Dogpay helps you send these payments internationally with more favorable FX, transparent fees; maintain proof; maybe schedule multiple payments cleanly; reduce surprises in cost. |
