Overview of Payroll Management in Mexico for 2026

In recent years, payroll administration has evolved from a purely operational function into a key strategic element for companies in Mexico. Ongoing labor, tax, and social security reforms, along with strengthened oversight mechanisms by the authorities, have significantly raised the level of compliance required in this area.

Today, proper payroll management not only helps prevent penalties, surcharges, and legal contingencies, but also contributes to strengthening employee relationships, ensuring transparency, and maintaining organizational competitiveness. Therefore, regardless of size or industry, companies must pay close attention to regulatory changes that will directly impact payroll processes starting in 2026.

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Minimum Wage Increases and Professional Wage Adjustments

As of January 1, 2026, significant increases to the minimum wage come into effect, directly impacting labor costs and social security contributions.

Likewise, professional minimum wages applicable to 61 professions, trades, and special jobs increase by the same percentage as the minimum wage in the corresponding zone.

In the case of the ZLFN, the adjustment corresponds to a 5% increase.

These changes have a direct impact not only on payroll, but also on benefits, employer-employee social security contributions, and other labor costs linked to the base salary.

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Update to Income Tax (ISR) Rates and Employment Subsidy

On December 28, 2025, the Ministry of Finance and Public Credit (SHCP) published Annex 8 of the 2026 Miscellaneous Tax Resolution in the Official Gazette of the Federation, through which the following were updated:

These rates are used to determine the income tax (ISR) applicable to individuals receiving salary and salary-equivalent income, so their update has an immediate effect on the tax withheld from employees.

Pursuant to Article 152 of the LISR, when cumulative inflation since the last update exceeds 10%, the tax brackets must be adjusted based on the National Consumer Price Index (INPC). This update takes effect on January 1, 2026.

Additionally, on December 31, 2025, the employment subsidy was updated. Its final amount may be adjusted once the applicable UMA for 2026 is published:

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Changes to Payroll CFDI Stamping and SAT Codes for 2026

For 2026, the Tax Administration Service (SAT) implemented Revision “E” of Payroll Supplement 1.2, introducing new codes to improve stamping accuracy and reduce ambiguities in the classification of earnings and deductions.

Code 038, “Other salary income,” will no longer allow an exempt portion; as of 2026, the amount must be considered fully taxable. In addition, for any earning, at least one of the fields Taxable Amount or Exempt Amount must contain a value other than zero.

Compliance with these provisions is mandatory as of January 1, 2026. Failure to update payroll and stamping systems may result in improperly issued CFDIs, discrepancies in withheld ISR, and tax contingencies.

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Changes to IMSS Contributions and UMA Update

Since 2023, a progressive employer contribution scheme to the Mexican Social Security Institute (IMSS) has been implemented and will continue increasing through 2030, based on the employee’s base salary for contributions.

The employer contribution rates applicable for 2026 are as follows:

The employee contribution remains unchanged at 1.125%.

The Unit of Measurement and Update (UMA) increased by 3.69% compared to 2025, effective as of February 1, 2026:

The UMA is a key economic reference for multiple legal obligations and is updated annually based on the INPC.

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Strategic Support and Compliance

At AS Consulting Group, our Payroll and Social Security BPO division is supported by updated technology, standardized processes, and a specialized team that continuously monitors regulatory changes applicable to payroll management in Mexico.

Our approach goes beyond formal compliance: we focus on preventing tax, labor, and social security risks, ensuring that every calculation, CFDI issuance, and obligation is handled accurately, timely, and sustainably.

In an increasingly technical and closely monitored regulatory environment, having a specialized partner makes all the difference. For any questions or a specific analysis of how these changes may impact your company, we invite you to contact your payroll consultant at ASCG.

Lic. Anayin Pineda Higuera Payroll and Social Security Manager | AS BPO AnayinP@ascg.mx Mobile: +52 55 2070 3609