What is SAT in Mexico?
What is SAT in Mexico? TL;DR
SAT in Mexico is the equivalent of the IRS in the US. A few bullet points worth noting are:
- Federal taxes: ISR (income tax), IVA (sales tax aka value added tax), IEPS (special tax), ISAN (autos)
- State taxes: Payroll, ISAI (real estate acquisition), ISH (lodging)
- Municipality taxes: Predial (property tax), public services tax (water, public electricity)
- Taxpayers: Individuals (salaried employees, professionals, landlords, etc.) and corporations (companies)
- ISR: Progressive income tax bracket similar to the US from 1.92% to 35%
- RESICO: Tax category known for “simple taxes” for individuals (≤ $3.5M) and corporations (≤ $35M)
SAT in Mexico
SAT (Servicio de Administración Tributaria) is a Mexican government entity in charge of supervising and managing tax compliance, ensuring that individuals and companies pay their taxes in accordance with Mexico’s tax laws. SAT also has an important role in foreign trade, as it is in charge of customs.
SAT Federal Taxes in Mexico
Income Tax (ISR)
- Personas físicas (Individuals) is a tax on income earned by individuals. It is paid progressively, i.e., the higher the income, the higher the percentage paid.
- Personas morales (corporations) is tax paid on the net profits of the companies.
Sales Tax aka Value Added Tax (IVA)
- Is a tax levied on the sale of goods and services. Generally, companies collect it from the final consumer, and remit it to the SAT. In Mexico, the standard rate is 16%, but certain products and services are zero-rated or exempt.
- In the northern border region and southern border region, the rate of IVA is set at 8%.
Special Tax on Products and Services (IEPS)
- This tax applies to specific products such as alcoholic beverages, tobacco, gasoline, and junk food.
Tax on New Automobiles (ISAN)
- This tax is paid when a new automobile is bought.
Non-Resident Income Tax (ISR for foreigners)
- Foreigners generating income in Mexico are liable to pay taxes.
SAT State Taxes
Each state in Mexico can levy its own taxes. The agency in charge depends on each state. The most common taxes are:
Payroll Taxes
- Payroll taxes are levied on companies on the salaries they pay to their employees. Each state has its own rate, which may vary.
Tax on Acquisition of Real Estate (ISAI)
- It is paid on the Acquistion of real estate (apartments, buildings, homes and land).
- The ISAI rate varies by state; for example, it’s higher Mexico City and lower in states such as Yucatán but generally ranges between 2% and 5% of the value of the property.
The Lodging Tax (ISH)
- Lodging tax is charged to tourists for each night of stay. This tax applies to services provided by Airbnb, campgrounds, inns, hotels and motels.
SAT Local Municipality Taxes
Some municipalities also impose taxes. A couple are:
Predial (Property Tax)
- Annual tax paid on the ownership of real estate (apartments, buildings, homes and land) within a given municipality.
Public Service Fees
- Taxes paid for services such as water, public lighting and garbage collection.
Types of Taxpayers According to SAT
SAT classifies taxpayers into two main groups: individuals (personas físicas) and companies (personas morales). Tax obligations depend both on your tax category (régimen fiscal) and on your level of income, since Mexico applies a progressive system based on tax brackets.
For individuals, the tax category depends on their economic activity:
- Salaried (Régimen de Asalariados): Employees who receive wages and benefits from an employer. Most contributions are withheld and paid by the employer.
- Professional Services (Régimen de Honorarios): Independent professionals (lawyers, consultants, etc.) who provide services to clients. They handle their own tax payments.
- Business Activities (Régimen de Actividades Empresariales): People engaged in commercial, industrial, agricultural, fishing, or transportation activities.
- Tax Incorporation (Régimen de Incorporación Fiscal, RIF): Small businesses and individuals who sell goods or services that don’t require a professional license. May also apply to those with interest income.
- Rental Income (Régimen de Arrendamiento): Individuals earning income from renting real estate. This category can be combined with others.
For companies (personas morales):
- Associations or corporations formed by two or more people. Their obligations vary depending on whether they operate for profit or not for profit.
Income Tax Rates (ISR) in Mexico
SAT Annual ISR Rate 2025
| Lower Limit $ | Upper Limit | Fixed Fee | % Over Lower Limit Excess |
|---|---|---|---|
| 0.01 | 8,952.49 | 0.00 | 1.92 |
| 8,952.50 | 75,984.55 | 171.88 | 6.40 |
| 75,984.56 | 133,536.07 | 4,461.94 | 10.88 |
| 133,536.08 | 155,229.80 | 10,723.55 | 16.00 |
| 155,229.81 | 185,852.57 | 14,194.54 | 17.92 |
| 185,852.58 | 374,837.88 | 19,682.13 | 21.36 |
| 374,837.89 | 590,795.99 | 60,049.40 | 23.52 |
| 590,796.00 | 1,127,926.84 | 110,842.74 | 30.00 |
| 1,127,926.85 | 1,503,902.46 | 271,981.99 | 32.00 |
| 1,503,902.47 | 4,511,707.37 | 392,294.17 | 34.00 |
| 4,511,707.38 | Onward (en adelante) | 1,414,947.85 | 35.00 |
SAT and RESICO in Mexico
The Régimen Simplificado de Confianza (RESICO) was introduced in 2022 by SAT to make tax compliance easier for individuals and small companies with low or moderate income. Under RESICO, taxes are calculated directly on income at reduced rates, without the need for most deductions.
RESICO for Personas Físicas (Individuals)
Applies to those who provide professional services, sell goods, lease property, or engage in business or farming activities.
Requirements:
- Annual income up to $3.5 million pesos.
- Be current with tax obligations.
- Not taxed under another system such as Salaries or RIF.
Benefits:
- Lower ISR rates, from 1% to 2.5% depending on income.
- Simpler tax returns.
- Straightforward—no need to hire an accountant.
Annual Income Tax Table for Personas Físicas (Individuals)
Below are the official RESICO rates for individuals in 2025.
| Annual Income | Rate |
|---|---|
| Up to $300,000 | 1.00% |
| Up to $600,000 | 1.10% |
| Up to $1,000,000 | 1.50% |
| Up to $2,000,000 | 2.00% |
| Up to $3,500,000 | 2.50% |
RESICO for Personas Morales (Legal Entities)
Applies to companies that:
- Are incorporated only by individuals (like Sole Proprietor, Single member LLC in the US).
- Have annual revenues up to $35 million pesos.
- Are not part of a corporate group and hold no shares in other companies.
Benefits:
- ISR rate of 30% on profits, with simpler deduction rules.
- Tax calculated on effective collections (cash flow), not invoicing.