Understanding and Calculating ISR in Mexico for 2025

Income Tax in Mexico, known as ISR (Impuesto Sobre la Renta), is a significant aspect of financial management for individuals and businesses alike. As we approach 2025, it’s crucial to understand how ISR is calculated and what factors influence it. This article aims to provide a comprehensive guide on calculating ISR in Mexico for the year 2025.

What is ISR in Mexico?

ISR in Mexico is a progressive tax system that applies to individuals, companies, and other entities. It is designed to ensure that those with higher incomes contribute a larger percentage of their earnings to the government. The ISR is calculated based on the gross income, deductions, and applicable tax rates.

Key Components of ISR Calculation

Calculating ISR involves several key components:

• Gross Income: This includes all income received during the tax period, such as salaries, bonuses, dividends, and interest.

• Deductions: Individuals and businesses can claim various deductions, such as medical expenses, education costs, and mortgage interest.

• Taxable Income: This is the income after deductions have been applied. It is the basis for determining the applicable tax rate.

• Tax Rate: ISR is calculated using a progressive tax rate schedule, which means the rate increases as income increases.

Understanding the Tax Rate Schedule

The ISR tax rate schedule for 2025 is as follows:

• Up to MXN 84,898: 1% of the income

• From MXN 84,899 to MXN 166,597: 15% of the income over MXN 84,898

• From MXN 166,598 to MXN 266,749: 30% of the income over MXN 166,597

• From MXN 266,750 to MXN 337,749: 35% of the income over MXN 266,749

• From MXN 337,750 and above: 38% of the income over MXN 337,749

Calculating ISR for Individuals

For individuals, the calculation of ISR involves the following steps:

1. Calculate the gross income for the tax period.

2. Apply any applicable deductions.

3. Determine the taxable income.

4. Apply the appropriate tax rate to the taxable income.

5. Calculate the ISR by multiplying the taxable income by the tax rate.

Calculating ISR for Businesses

Calculating ISR for businesses is similar to that for individuals, but with some additional considerations:

• Business Income: This includes all income generated by the business, such as sales, services, and interest.

• Expenses: Businesses can deduct various expenses, such as salaries, rent, utilities, and supplies.

• Net Income: This is the income after deductions have been applied.

• ISR Calculation: The same steps as for individuals are followed to calculate the ISR.

Conclusion

Understanding and calculating ISR in Mexico for 2025 is essential for both individuals and businesses. By following the guidelines outlined in this article, you can ensure that you are accurately calculating and paying your ISR. Remember to consult with a tax professional if you have any questions or need further assistance.