Taxes for Expats in Mexico (2026): Tax Residency, What Mexico Taxes, and US Filing

The two questions that decide your tax situation

1. Are you a Mexican tax resident? If so, Mexico taxes your income from everywhere. If not, Mexico taxes only income from Mexican sources.
2. What does your home country still expect? The US taxes its citizens wherever they live; Canada and most other countries tax based on residence, so leaving can change — and sometimes trigger — your obligations there.

When you become a Mexican tax resident

Article 9 of the Federal Tax Code (Código Fiscal de la Federación) treats an individual as a Mexican tax resident when:

• They have established their home (casa habitación) in Mexico.
• If they also have a home in another country, they're a Mexican resident when their center of vital interests is in Mexico — which the law says is the case, among others, when:
  • more than 50% of their total income in the calendar year comes from Mexican sources, or
  • their main professional activity is centered in Mexico.

What this means in practice

• Immigration status and tax residency are separate tests. A residency card alone doesn't make you a tax resident; selling your home abroad and living full-time in a Mexican home very likely does.
• Keeping a home in two countries pushes the question to where your income and professional life are centered — and then to the tie-breaker rules in the tax treaty between Mexico and your country.
• Days alone aren't the test in Mexico's definition — your home and center of vital interests are.

What Mexico taxes, and at what rates

• Residents: taxed on all their income, wherever it comes from (Income Tax Law, Article 1).
• Non-residents: taxed only on income from Mexican sources.
• Rates: individuals calculate annual income tax (ISR) on a progressive scale of 11 brackets, with marginal rates from 1.92% to 35% (Article 152). The 2026 brackets were updated for inflation in Annex 8 of the Miscellaneous Fiscal Resolution.
• Credits: the law lets residents credit certain taxes already paid, and tax treaties with the US, Canada and other countries are designed to prevent the same income being fully taxed twice.

Getting an RFC (tax ID)

If you'll earn Mexican income, invoice Mexican clients, work locally or sell property with the residence exemption, you'll need an RFC from SAT, Mexico's tax authority. Foreigners register free, in person, with an appointment; registering also records the tax obligations tied to the activities you declare, so take advice first. Step by step: how foreigners get an RFC.

Property taxes and selling a home

• Annual property tax (predial) is set by each municipality and is low by US and Canadian standards.
• Buying involves an acquisition tax and notary costs; see buying property.

The primary-residence exemption

Under Article 93 (section XIX) of the Income Tax Law, the sale of the taxpayer's home is exempt from income tax when:

• the price doesn't exceed 700,000 UDIs (an inflation-indexed unit) — tax is calculated on any excess;
• the sale is formalized before a notary (fedatario público);
• you haven't used the exemption for another home in the previous three years, and you declare this under oath to the notary.

In practice the notary will want proof that the property is your home and that you're a Mexican tax resident, which is one reason many owners get an RFC well before they sell.

If you're a US citizen

• Keep filing: the IRS taxes citizens on worldwide income wherever they live.
• Extra time, not extra grace: if you live abroad you get an automatic two-month extension to file (to June 15 for calendar-year returns), but interest runs on any tax not paid by April 15.
• Relief: the foreign earned income exclusion and the foreign tax credit can reduce or eliminate US tax on income also taxed in Mexico — you claim them on your return.
• Reporting: file an FBAR (FinCEN Form 114) if your foreign accounts total more than US$10,000 at any time in the year; some people must also file Form 8938 for foreign assets.

If you're Canadian

Canada taxes based on residence. Whether you stay a Canadian tax resident depends on the ties you keep — home, family, bank accounts, health coverage — and ceasing to be resident can trigger tax on certain assets when you leave. Talk to a Canadian cross-border tax professional before your move date.

Remote workers

If you live in Mexico and work remotely for a foreign employer or clients, you may become a Mexican tax resident on that income under Article 9. Some consulates now ask remote workers for an employer letter approving work from abroad — see the New York and San Diego consulate requirements. Read our remote work guide, and get advice on both countries' rules before your first full year.

Working with a Mexican accountant

A good contador is worth having from your first year. Questions to ask:

• Based on my home, income and assets, am I a Mexican tax resident — and from when?
• Do I need an RFC, and which tax regime and activities should I register?
• Which of my income types does Mexico tax, and how do the treaty and credits apply?
• What will I need to sell my home with the residence exemption?
• What annual filings will I have, and what do you charge for them?