Payroll Glossary 2026: Mexican ISR, IMSS, UMA, Aguinaldo

Definitions reflect the Federal Labour Law, the Income Tax Law and the Social Security Law with 2026 values. They are summaries, not legal advice: where a term has its own calculator or guide, the link takes you to the detail and its official sources.

Aguinaldo (year-end bonus): A mandatory annual bonus of at least 15 days’ pay, due before 20 December under article 87 of the Federal Labour Law. New starters receive a pro-rated amount. It is not discretionary, whatever your contract says. Aguinaldo calculator.
Anexo 8 (Annex 8): The annex to the yearly Miscellaneous Tax Resolution in which the SAT publishes the ISR tables for each pay period and the annual table. The 2026 edition was published in the Official Gazette on 28 December 2025. ISR tax brackets 2026.
CFDI de nómina (e-payslip): The electronic tax invoice an employer must issue for each salary payment. It is your official payslip, listing earnings, deductions and ISR withheld, and it feeds the tax authority’s records for your annual return.
CONASAMI: The National Minimum Wage Commission. Each December its council sets the general minimum wage, the northern border minimum and the professional minimums for the following year. Minimum wage 2026.
Cuota fija (fixed amount): The column of the ISR tables holding the tax already due on all lower brackets. Payroll adds it to the bracket rate applied to income above the lower limit.
Cuota obrera (employee IMSS share): The part of social security contributions deducted from your pay: health and maternity, disability and life, and retirement and old age. Your employer pays a larger share of its own on top. IMSS calculator.
DOF (Official Gazette): Diario Oficial de la Federación, the federal gazette. A new rate, decree or minimum wage only exists once it has been published there.
Exempt income: Earnings that are free of ISR up to a cap measured in UMA: part of the aguinaldo, the vacation premium, PTU, Sunday premium and severance. Anything above the cap is taxed like salary.
Factor de integración (integration factor): The multiplier that turns a daily wage into an integrated daily wage. With the legal minimum benefits it is 1 + (15 aguinaldo days + vacation days × 25 % premium) ÷ 365, and it rises with seniority.
Finiquito (final pay): The settlement owed whenever employment ends, for any reason, including resignation: unpaid wages, pro-rated aguinaldo and vacation, vacation premium and, in some cases, the seniority premium. Finiquito calculator.
IMSS: Mexican Social Security Institute. Runs compulsory health care, sick pay, pensions and childcare for employees. Foreign nationals on a Mexican payroll are enrolled like everyone else. IMSS calculator.
Indemnización (dismissal indemnity): 3 months of integrated pay owed to an employee dismissed without justified cause, under articles 48 and 50 of the Federal Labour Law. It is the core of a liquidación. Severance pay calculator.
INEGI: The national statistics and geography institute. It measures inflation and publishes the new UMA value every January. UMA 2026.
ISR (income tax): Impuesto sobre la Renta, Mexico’s federal income tax. On salaries the employer withholds it each pay period using the Annex 8 tables. Rates rise by bracket up to the top rate. ISR tax calculator.
LFT (Federal Labour Law): Ley Federal del Trabajo, the statute that sets minimum employment rights in Mexico, from working hours and vacation to bonuses, profit sharing and severance. Contracts cannot go below it.
Límite inferior (lower limit): The first column of an ISR table: the income from which a row applies. The row’s rate is charged only on what exceeds this figure.
Liquidación (severance package): What an unjustly dismissed employee receives: the finiquito plus the three-month indemnity, twenty days per year of service where applicable, and the seniority premium. Severance pay calculator.
Prima de antigüedad (seniority premium): 12 days’ pay per year of service, with pay capped at twice the minimum wage (article 162). Owed on dismissal, and on resignation only after 15 years or more.
Prima dominical (Sunday premium): An extra payment for working on a Sunday. Part of it is exempt from ISR, up to one UMA per Sunday worked.
Prima vacacional (vacation premium): An extra payment of at least 25 % of the pay for your vacation days, under article 80 of the Federal Labour Law. Vacation premium.
PTU (profit sharing): Participación de los Trabajadores en las Utilidades. Companies share 10 % of their taxable income with staff, half by days worked and half by salary, subject to an individual cap. Company directors are excluded. PTU profit sharing.
Quincena (fortnight): A 15-day pay period. Fortnightly payroll, paid around the 15th and at month end, is a very common schedule for salaried staff in Mexico.
Retención (withholding): The ISR your employer deducts from each payment and pays to the SAT on your behalf. It is an advance on your annual tax, not a charge kept by the company.
RFC: Registro Federal de Contribuyentes, the taxpayer registration code issued by the SAT. Employers need it to issue your e-payslips, so new arrivals should obtain it early.
RMF (Miscellaneous Tax Resolution): The yearly set of SAT rules for applying the tax laws. Its annexes contain, among other things, the ISR tables.
Salario base de cotización (SBC): The daily wage on which IMSS contributions are calculated. It includes integrable benefits, cannot be lower than the local minimum wage and is capped at 25 UMA a day under article 28 of the Social Security Law. IMSS calculator.
Salario diario integrado (SDI): Daily wage plus the daily share of benefits such as aguinaldo and vacation premium. Labour indemnities are calculated on it.
Salario mínimo (minimum wage): In 2026, MX$315.04 a day in most of Mexico and MX$440.87 in the northern border zone. No ISR is withheld from a worker paid only the minimum. Minimum wage 2026.
SAT: Servicio de Administración Tributaria, the federal tax authority. It publishes the ISR tables, receives withholdings and runs the annual return.
Subsidio para el empleo (employment subsidy): An ISR reduction for salaries up to MX$11,492.66 a month in 2026, applied through payroll. It never produces a refund. Employment subsidy.
Tax residence: The status that decides how Mexico taxes your wages. A Mexican tax resident on local payroll is withheld with the Annex 8 tables whatever their nationality; non-residents fall under separate rules not covered by this site.
UMA: Unidad de Medida y Actualización, the peso yardstick used for exemptions, fines and caps. In 2026 it is MX$117.31 a day from 1 February. UMA 2026.
Vacaciones dignas (paid leave reform): The 2022 reform of articles 76 and 78 of the Federal Labour Law: 12 days of paid vacation after the first year, two more each year up to 20, then two more every five years. Vacation days in Mexico.
ZLFN (northern border free zone): Zona Libre de la Frontera Norte: 45 border municipalities with their own, higher minimum wage. Northern border minimum wage.

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