Mexican labor laws must be considered very protective in favor of workers, aiming to protect the rights for which laborers have fought for many years.
In the current era, the minimum wage for workers in Mexico has been periodically updated, reclaiming its purchasing power, yet still falling short of what Mexican labor laws stipulate. It is anticipated that it will continue to increase annually.
On another note, in the field of Mexican tax law, authorities have updated the employment subsidy. But what is the employment subsidy?
The employment subsidy is a fiscal benefit for employees with salaries below the market average, aimed at reducing the income tax (ISR) they would have to pay.
However, due to recent increases in the minimum wage, this employment subsidy had become insufficient in assisting such employees. Therefore, as of May 1, 2024, the mechanics and amount of the employment subsidy have been modified. Hence, if you are an employer with workers, please consider the following points:
All employees with a monthly salary of up to $9,081 pesos (550 USD) will be entitled to the employment subsidy.
The monthly employment subsidy for 2024 will be $390 pesos (24 USD), which is 11.82% of the Unit of Measurement and Update (UMA).
Considering an employee with a monthly salary of $8,000 pesos, for example, we provide a comparison of benefits:
Concept | Previous | Current |
Salary | 8,000.00 | 8,000.00 |
ISR to pay | 478.57 | 478.57 |
Employment subsidy | 0 | 390.00 |
Net to receive | 7,521.43 | 7,911.43 |
| Benefit | 5% |
Therefore, our final considerations for both Mexican and foreign investors would be as follows:
Implement these fiscal modifications into our payroll calculation systems for the proper consideration of the mentioned employment subsidy.
In cases where the employment subsidy exceeds the ISR to be paid by the worker, this does not generate a balance in favor or credit.
The employer must obtain a statement from the worker indicating they are not receiving this benefit from another employer.
The employment subsidy must consider that it may be modified in February when the UMA changes.
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