How Wages Are Calculated in Mexico: Daily Pay, Benefits and Payroll Contributions
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Key Takeaways
- In Mexico pay is set and quoted by the day, and an hourly cost is a conversion made at the end from a full year of paid days.
- The integrated daily wage adds the daily share of aguinaldo and the vacation premium: a factor of 1.0493 in the first year of service.
- IMSS and INFONAVIT are charged branch by branch on the contribution base, and the state payroll tax on taxable remuneration at each state's rate.
- Aguinaldo of at least 15 days, vacation with a 25% premium and 10% profit sharing are set by law; a collective agreement can add to them.
- From 2027 the day-shift week steps down two hours each January with no cut in pay, so the same wage costs more per scheduled hour.
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A quoted wage is the starting point of a labor cost calculation in Mexico, and only the starting point. The employer’s cost also carries paid time, the benefits the law requires, social security and housing contributions, a state payroll tax, and whatever a plant adds to recruit and keep people. In Mexico, pay is set and quoted in pesos per day, as a rule, not per hour as in the United States and Canada, and the daily wage is paid for all 365 days of the year, rest days and holidays included. An hourly cost, the number a North American model needs, is a conversion you make at the end rather than a rate you start from.
This guide explains how wages are calculated in Mexico: how those pieces fit together and how one day’s pay becomes an hourly figure you can set beside your own plant’s. The rates are the statutory ones as of 2026, with the article where one applies. For the arithmetic we follow one hypothetical worker in the general minimum wage zone, paid 400 pesos a day, chosen for the math; the result is a wage-only cost per scheduled hour, and the guide ends with what has to be added to reach the employer’s cost.
365
Paid days a year in the costing
15
Days’ pay, the minimum aguinaldo
2,392
Scheduled hours a year from 2027
Pay Is Set by the Day
Mexico’s Federal Labor Law lets an employer fix pay by unit of time, by piece or by task. Since 2012 it has also allowed pay by the hour as a unit of time, provided the worker never earns less than a full day’s wage for a day’s work (LFT art. 83). In Mexico, in practice and in every statutory wage calculation, the unit is the day. The minimum wage is a daily figure. Benefits are expressed in days of wages. Contributions are charged per day. A monthly salary is converted to a daily one by dividing by 30 for the law’s own calculations (art. 89), and when a U.S. model wants an hourly figure, it has to be built from the day.
The daily wage is paid for every day of the year, worked or not. The weekly rest day is paid in full (art. 69). The mandatory holidays are paid (art. 74). Vacation is paid (art. 76). So for the costing below we assume a worker on the payroll all year with no unpaid absences: 400 × 365 = 146,000 pesos before anything is added, over 2,496 scheduled hours on the 48-hour week by the 52-week convention.
Two floors sit under every wage. In 2026 the general minimum wage is 315.04 pesos a day, and 440.87 pesos in the northern border free zone, set by CONASAMI from January 1 (which is why our 400-peso worker sits in the general zone). The general-zone floor has risen by double digits every January since 2019; the year-by-year table is in Minimum Wage in Mexico 2026. Separately, several contribution thresholds are measured not in minimum wages but in UMA, the daily reference value that replaced the minimum wage in most legal formulas: 117.31 pesos from February 1, 2026.
Required Employee Benefits
The Federal Labor Law requires a fixed set of payments beyond the daily wage. These apply to employers in Mexico whatever a contract or a plant adds later.
- Aguinaldo, the year-end bonus
- At least 15 days’ wages, paid before December 20, and proportional for a worker with less than a year of service (art. 87). For example, our 400-peso worker with a full year receives 6,000 pesos in December.
- Vacation and the vacation premium
- Twelve working days once the first year of service is complete, then 14, 16, 18 and 20 in the second through fifth years, 22 in the sixth through tenth, 24 in the eleventh through fifteenth, and so on, two more days for each further five years (art. 76). The days are paid, and already inside the 365; what is added is a premium of at least 25% on the wages for those days (art. 80). So in year one that is 12 × 400 × 0.25 = 1,200 pesos.
- Profit sharing, PTU
- Each year a company distributes 10% of its taxable income, as determined for PTU under the income tax law, to its workers (LFT arts. 117 to 127; LISR art. 9). Half is divided by days worked, half in proportion to wages (art. 123). Each worker’s share is capped at three months’ wages or the average of the PTU they received in the last three years, whichever is higher (art. 127). It is paid within 60 days of the date the annual tax is due, which for a company means by May 30 (art. 122).
- Premiums for working when the law says rest
- A worker who works the weekly rest day is paid double in addition to the day’s wage (art. 73); a mandatory holiday worked pays double in addition (art. 75); and a worker whose ordinary schedule includes Sunday earns a 25% Sunday premium (art. 71).
The Integrated Daily Wage (Salario Diario Integrado)
From there, two of those benefits, aguinaldo and the vacation premium, are folded into a second daily figure the law uses from here on. The integrated daily wage, salario diario integrado or SDI, is the daily wage plus the daily share of what the employer pays on top of it, in cash and in kind: bonuses, premiums, commissions, housing, food and any other regular benefit (LFT art. 84). The labor law uses it for indemnities, severance above all (art. 89).
For a worker on statutory benefits only, the integration takes those two items and spreads them over the year:
The integration factor, year one
(365 + 15 + 12 × 0.25) ÷ 365 = 383 ÷ 365 = 1.0493. On 400 pesos a day the integrated wage is 400 × 1.0493 = 419.72 pesos. In the second year vacation rises to 14 days and the factor to 1.0507; it climbs with vacation through the fifth year and then every five years. A collective agreement that sets aguinaldo above 15 days or a premium above 25% raises the factor the same way.
In turn, social security uses a related figure with its own rules, the contribution base wage, salario base de cotización or SBC. It starts from the same integration, then applies the Social Security Law‘s adjustments (LSS arts. 27 and 28).
Some items are left out within limits and conditions: a savings fund built from equal employer and worker deposits with no more than two withdrawals a year, food vouchers up to 40% of the UMA, attendance and punctuality bonuses of up to 10% of the base each, overtime within the legal limits, and profit sharing. It can never be below the minimum wage. And it is capped at 25 times the UMA, 2,932.75 pesos a day in 2026. Take our 400-peso worker with no extras: the SDI and the SBC come out at the same 419.72 pesos; they are different calculations with different purposes, and they part ways as soon as a plant adds benefits.
Employer Contributions and State Payroll Tax
Three contributions are calculated on top of the wage in Mexico, and none is a simple percentage of the daily wage alone. Two are charged on the SBC, one on payroll.
- IMSS, social security
- The employer’s share is set branch by branch in the Social Security Law. Most branches are a percentage of the SBC. Sickness and maternity also carries a fixed amount per worker set in UMA. The advanced-age unemployment and old age branch, CEAV, is on a sliding scale by wage band that takes a step every January through 2030 (art. 168 and the 2020 reform’s transitory). The occupational-risk branch varies by employer: a premium set by its risk class and claims history, between 0.5% and 15% (arts. 73 and 74). So on our 400-peso day the branches other than occupational risk come to about 80 pesos.
- INFONAVIT, the housing fund
- 5% of the SBC (Ley del INFONAVIT art. 29). On our 400-peso day, about 21 pesos. The money goes to an account in the worker’s name for a mortgage or home improvement; the contribution and the loan deductions that run beside it are explained in INFONAVIT for Manufacturers.
- ISN, the state payroll tax
- Charged by each state on taxable remuneration as that state defines it, at about 2% to a little over 4% depending on the state, with surcharges in some and exemptions for certain payments in some. On the 400-peso wage alone, 8 to 17 pesos a day, and the rate falls on most cash pay as it is paid. It is the one contribution that changes with the state you choose, so ask for the current rate and surcharges in any corridor on your shortlist.
The IMSS lines on a 400-peso day
| IMSS branch | Rate | Pesos a day |
|---|---|---|
| Sickness and maternity, fixed quota (art. 106 I and transitory) | 20.40% of one UMA | 23.93 |
| Sickness and maternity, excess over three UMA (art. 106 II) | 1.10% of the SBC above 351.93 | 0.75 |
| Cash benefits, same branch (art. 107) | 0.70% of the SBC | 2.94 |
| Pensioners’ medical care, same branch (art. 25) | 1.05% | 4.41 |
| Disability and life (art. 147) | 1.75% | 7.35 |
| Child care and social benefits (art. 211) | 1.00% | 4.20 |
| Retirement (art. 168) | 2.00% | 8.39 |
| CEAV, band for 3.51 to 4.00 UMA (art. 168, 2026 step) | 6.613% | 27.76 |
| Occupational risk (arts. 73 and 74) | 0.5% to 15% by employer | set by the employer’s class |
| Total before occupational risk, lines rounded to the centavo | 79.73 |
Aguinaldo and the vacation premium raise the base, so they raise the percentage contributions too; PTU and overtime within the legal limits do not (LSS art. 27).
Shifts, Overtime and the 40-Hour Week
Mexico sets the working day by shift: a day shift is eight hours, a night shift seven, and a mixed shift seven and a half (LFT art. 61). Since pay is set by the day, a night shift is commonly paid the same daily wage for fewer hours. Through 2026 the standard day-shift week is 48 hours. A constitutional reform published March 3, 2026, carried into the labor law by a decree of May 1, cuts it to 40 at no reduction in pay, two hours each January. The transition year by year, and what it changes for scheduling, is in Mexico’s 40-Hour Workweek.
| Year | Standard week, day shift | Overtime at double time, weekly cap |
|---|---|---|
| 2026 | 48 hours | 9 hours |
| 2027 | 46 | 9 |
| 2028 | 44 | 10 |
| 2029 | 42 | 11 |
| 2030 | 40 | 12 |
Because pay is daily, the same wage buys fewer hours each year. For a plant that schedules the shorter week at the same daily pay, the cost of an hour rises by 4% to 5% at each step without any raise, for any model that runs past January 2027.
Overtime in Mexico is calculated on the hourly wage: double up to the weekly cap in the table, spread over up to four hours a day on up to four days (art. 66). Hours beyond the cap pay triple, may not exceed four more a week, and no day may run past twelve hours in all (art. 68). The May 2026 decree also made an electronic record of hours worked an obligation from May 1, 2026 (art. 132), with the STPS rules on its scope taking effect January 1, 2027. For example, on our 400-peso day shift, an hour of ordinary time is 50 pesos, an overtime hour up to the cap 100, and an hour beyond it 150.
What a Collective Agreement Adds
Everything above is the floor. A collective bargaining agreement, contrato colectivo de trabajo, between an employer and a union can set terms above it: more days of aguinaldo, more vacation or a higher premium, shift premiums, or benefits the law does not name. Whatever the agreement sets becomes the employer’s obligation. And where a benefit is paid regularly in cash, it enters the integrated wage and, unless the law excludes it within limits, raises the contribution base with it. Whether a plant has an agreement, and what it says, is specific to that plant and that union.
Benefits for Recruiting and Retaining Employees
Beyond any agreement, employers also add benefits to recruit and keep people in the labor market they hire in: a bus route, a subsidized cafeteria or food vouchers, a savings fund the employer matches, an attendance bonus, group medical insurance. The law treats some of these differently from wages, and food vouchers, a qualifying savings fund and attendance bonuses stay out of the contribution base within the limits above (LSS art. 27). Which of them a plant needs, and at what level, depends on the roles, the shifts and the local market, and it takes current local wage and benefit data to turn those choices into budget lines.
From One Day to an Hourly Cost
The last step in calculating a wage cost in Mexico is turning the day into an hour. Say you divide the 400-peso day by an eight-hour shift: you get 50 pesos an hour. But the day is paid 365 times, and the shift is worked on scheduled days only. To keep the paid days in, divide the annual cost by the scheduled hours, on the 52-week payroll convention, with vacation and holidays inside those hours. On the 48-hour week of 2026 that is 2,496 hours a year, and the wage alone is 146,000 ÷ 2,496 = 58.49 pesos per scheduled hour.
On the 46-hour week that applies from January 2027, which most companies evaluating Mexico today are planning for, it is 2,392 hours, and the same unchanged wage is 146,000 ÷ 2,392 = 61.04 pesos per scheduled hour, more than a fifth above the eight-hour shortcut: the paid rest days are not in the denominator, and the 2027 week has fewer hours. At an assumed 18.5 pesos to the dollar, that is a wage-only cost of $3.30 per scheduled hour. It is not a cost per hour worked; that figure would take the vacation and holiday hours out as well, and the two are different figures.
The employer’s cost per hour is then built the same way, once the rest is in:
The formula
Employer cost per scheduled hour = annual employer labor cost ÷ annual scheduled hours. Annual employer labor cost is the wage for 365 days, plus aguinaldo and the vacation premium, plus IMSS at the plant’s rates including its occupational-risk premium, plus INFONAVIT, plus the state payroll tax at the state’s rate, plus whatever the collective agreement and the plant’s own benefits add, with paid leave counted once and overtime shown as its own line. Use the same basis for every location you compare.
What moves the hour after that
Then two things move that hour without touching the wage. The first is the calendar: at each January step the same annual cost spreads over fewer hours (2,288 in 2028, 2,184 in 2029, 2,080 in 2030). The second is the shift: a night shift paid the same day’s wage for seven hours costs a seventh more per hour than the day shift.
Annual updates and payment deadlines
The minimum wage resets on January 1, and the CEAV contribution takes its next scheduled step the same day. The UMA, which sets the fixed IMSS quota and the contribution cap, resets on February 1. The workweek steps down each January from 2027 to 2030. PTU is paid by the end of May on the prior year’s result. Aguinaldo is paid before December 20. A model that runs past one January should carry all five.
Estimating What Your Operation Would Cost in Mexico
In the end, to turn these wage calculations into a labor budget for Mexico you need wage and benefit data for your planned roles, staffing levels, shifts and location. The fully fringed employer cost of the roles a plant hires first, the wage with the benefits and contributions Mexican law requires on top of it, is in Manufacturing Labor Costs in Mexico: 2026 Wage Benchmarks, as the average starting rate across the Tetakawi Manufacturing Campuses, with its basis stated; Average Wage in Mexico explains why the national average you will find first measures something else. Labor is one part of a broader manufacturing cost estimate that also carries facilities, utilities, logistics and the other operating lines, which cost and workforce in Mexico sets out.
Tetakawi has helped companies manufacture in Mexico since 1986. We use data from our Manufacturing Campuses and that operating experience to help you evaluate expected labor costs and build a cost model for your operation, combining local cost inputs with the production assumptions your team provides.
For companies operating on a Tetakawi Manufacturing Campus, Tetakawi’s Mexican entity is the employer of record, and our team carries the administrative work: the entity, the registrations, the filings and the payroll, including the contributions above. You define the roles and the hiring plan, select from the candidates presented, set the standards, and direct and supervise the work. You see and approve the payroll before it runs.
Tell us what you plan to manufacture, your expected head count and your target start date, and we can help you identify the inputs needed to estimate what operating in Mexico would cost.
Frequently Asked Questions
How are wages calculated in Mexico?
By the day. The law allows pay by the hour as a unit of time, but the minimum wage, benefits and contributions are all set in days (LFT art. 83), and the daily wage is paid for rest days, holidays and vacation as well as days worked. Benefits and contributions are then calculated from that daily wage and its integrated form, and an hourly figure is a conversion made from the day.
What is the salario diario integrado and how is it calculated?
The integrated daily wage is the daily wage plus the daily share of the cash and in-kind benefits paid on top of it (LFT art. 84). On statutory benefits it is the wage times the integration factor: (365 + 15 days of aguinaldo + 12 vacation days × 25%) ÷ 365 = 1.0493 in the first year of service. The factor rises with vacation through the fifth year and then every five years.
What is the difference between the SDI and the salario base de cotización?
They are two calculations with two purposes. The SDI is the labor law’s integrated wage, used for indemnities such as severance. The SBC is the social security base: it starts from the same integration, leaves out certain benefits within limits, has a floor at the minimum wage and a cap of 25 UMA (LSS arts. 27 and 28). IMSS and INFONAVIT contributions are charged on the SBC. For a worker on statutory benefits only, the two amounts coincide.
What do employers in Mexico pay to IMSS and INFONAVIT?
IMSS contributions are set branch by branch on the contribution base: a fixed quota for sickness and maternity, percentage branches for cash benefits, pensioners’ care, disability and life, child care and retirement, the CEAV branch on a sliding scale, and an occupational-risk premium by class. INFONAVIT is 5% of the contribution base. On a hypothetical 400-peso day in 2026, INFONAVIT is about 21 pesos and the IMSS branches other than occupational risk about 80.
What is aguinaldo and when is it paid?
Aguinaldo is the year-end bonus the law requires: at least 15 days’ wages, paid before December 20, proportional for less than a year of service (LFT art. 87). A collective agreement can set more days.
What is PTU and how is it calculated?
PTU is mandatory profit sharing: 10% of a company’s taxable income as determined for PTU under the income tax law, distributed each year to its workers, half by days worked and half in proportion to wages (LFT arts. 117 to 127; LISR art. 9). Each worker’s share is capped at three months’ wages or the three-year average, whichever is higher. It is paid within 60 days of the date the annual tax is due, by May 30 for a company.
How does the 40-hour week change the cost of an hour?
The standard day-shift week falls two hours each January from 2027 to 2030 with no cut in pay. For a plant that schedules the shorter week at the same daily pay, the cost per hour rises 4% to 5% at each step, and overtime starts sooner, paid at double up to the weekly cap and triple beyond it within the limits the 2026 decree sets (LFT arts. 66 and 68).
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