Mexico’s employment subsidy in 2026: how much, who gets it and where it vanishes
The employment subsidy (subsidio para el empleo) cuts ISR on the lowest salaries. Its amount and income limit changed in 2026; here is what payroll applies and what the limit does to a raise.
Reviewed by Radif Partners · Editorial policy
The employment subsidy is an income-tax reduction that employers apply through payroll to low earners. The decree published in Mexico’s Official Gazette on 31 December 2025 sets it for 2026 at 15.02% of the monthly UMA, MX$535.65 a month from February to December, for monthly income up to MX$11,492.66. January used 15.59% of the 2025 UMA, because the 2026 UMA only took effect on 1 February. The subsidy is deducted from the ISR produced by the article 96 tariff and cannot create a refund: if it is larger than the tax, ISR falls to zero and the rest is lost. There is no taper. One peso above the limit and it disappears entirely, which creates a band where earning more leaves less money in your account.
How much employment subsidy do you get?
Subsidy applied per month
MX$535.65
| ISR from the tariff | MX$729.02 |
| ISR withheld after the subsidy | MX$193.37 |
| Income limit for the subsidy | MX$11,492.66 |
The subsidy month by month around the limit
| Monthly income | ISR from tariff | Subsidy | ISR withheld | Net after IMSS |
|---|---|---|---|---|
| MX$9,582.47 | MX$0.00 | MX$0.00 | MX$0.00 | MX$9,582 |
| MX$10,000.00 | MX$729.02 | MX$535.65 | MX$193.37 | MX$9,554 |
| MX$10,500.00 | MX$783.42 | MX$535.65 | MX$247.77 | MX$9,985 |
| MX$11,000.00 | MX$837.82 | MX$535.65 | MX$302.17 | MX$10,416 |
| MX$11,492.66 | MX$891.42 | MX$535.65 | MX$355.77 | MX$10,841 |
| MX$11,500.00 | MX$892.22 | MX$0.00 | MX$892.22 | MX$10,311 |
| MX$12,000.00 | MX$946.62 | MX$0.00 | MX$946.62 | MX$10,742 |
| MX$12,500.00 | MX$1,001.02 | MX$0.00 | MX$1,001.02 | MX$11,173 |
The first row is the general minimum wage. Neither ISR nor the subsidy is calculated, because article 96 of the ISR law bars withholding from anyone earning only the minimum. From there the full subsidy applies up to MX$11,492.66 and disappears one centavo later. The last column shows the effect: net pay falls back as income crosses the limit.
Why the limit sits where it does
The decree spells out its reasoning: the subsidy should reach people earning up to about 1.2 times the minimum wage and raise their disposable income in step with the minimum wage. With the general minimum up 13 % in 2026, from MX$278.80 to MX$315.04 a day, the government raised the UMA percentage from 13.8% to 15.02% and the income limit from MX$10,171 to MX$11,492.66. The amount now moves with the UMA every year on its own, but the income limit is written in pesos and needs a new decree to change.
That matters for anyone working along the US border. The minimum wage there is MX$440.87 a day, MX$13,409.80 a month, already above the subsidy limit. Someone on the border minimum pays no ISR under the minimum-wage rule, but anyone earning a little more gets no subsidy at all: in the northern border free zone the subsidy barely exists for salaried workers.
The cliff: when a raise lowers take-home pay
At MX$11,492.66 a month you keep MX$10,841 net; at MX$12,000 you keep MX$10,742. That is not a payroll error. It is the MX$535.65 subsidy disappearing in one step. The same happens when a performance raise, Sunday premium or taxable overtime pushes one month’s income over the limit. The simulator below shows how much of a raise you keep from a given starting point.
A raise near the subsidy limit
What the raise adds to net pay
MX$154
| Net before | MX$10,416 |
| Net after | MX$10,570 |
| Share of the raise you keep | 19 % |
If you are negotiating pay in this band, there are two sensible ways out: ask for enough to clear the band altogether, or take part of the raise as tax-exempt benefits within their legal limits, which do not count as taxable income for the subsidy test. Asking to be paid part of the raise off the books is not one of them: it is illegal and leaves that money outside your IMSS record.
How your employer applies it, step by step
Payroll first adds up the month’s taxable income: salary, taxable overtime and the taxable part of any bonus or premium. If the total is at or below MX$11,492.66, it works out ISR with the monthly tariff in Annex 8 and subtracts the subsidy, down to zero at most. Weekly or fortnightly payrolls use the tariff for that period and a daily subsidy of MX$17.6199, with the monthly amount as the ceiling.
On the digital payslip, the CFDI, the subsidy shows up as «subsidio para el empleo» under other payments, with the amount applied. If you earn little and it is missing, ask HR: a common error is payroll software still running the 2025 limit of MX$10,171, which leaves anyone earning between that figure and MX$11,492.66 without it.
What the subsidy is not
It is not a welfare benefit you apply for at an office. It is a tax reduction that only exists inside the payroll of a formal job. Freelancers paid by invoice (honorarios) and taxpayers in the simplified trust regime (RESICO) do not receive it, and it does not change your IMSS contributions, which are calculated separately on your contribution base. To see every deduction together, use the net salary calculator.