RESICO is Mexico's simplified tax regime for individuals with business or professional income up to about MXN 3.5 million a year. It taxes gross revenue at roughly 1% to 2.5% — attractive for freelancers and small online businesses, though you must register for an RFC and issue electronic invoices.

Mexico Taxes for US Expats (2026)

Q: Do US retirees pay tax in Mexico?

Mexican tax residents are taxed on worldwide income, but most US retirees owe little or no Mexican tax on US-source retirement income thanks to the US–Mexico treaty and the foreign tax credit. You still file a US return every year. This is general information, not tax advice.

Q: When do you become a Mexican tax resident?

When Mexico becomes your main home, or you spend more than 183 days there and your center of vital interests (over half your income or your main professional base) is in Mexico. Residents are taxed on worldwide income; non-residents only on Mexican-source income.

By Expat Cove Editorial TeamUpdated June 7, 2026SAT, IRS & treaty sources

Short answer: if you make Mexico your home you're taxed on worldwide income (ISR, up to 35%), but the US–Mexico treaty plus the foreign tax credit mean most US retirees owe little or no Mexican tax on US retirement income. Freelancers love RESICO (~1–2.5% of gross). You always still file with the IRS. General information, not tax advice.

When do you become a Mexican tax resident?

You're a Mexican tax resident when Mexico is your main home, or you spend more than 183 days there and your "center of vital interests" is in Mexico (over half your income, or your main professional base). Residents are taxed on worldwide income; non-residents only on Mexican-source income. Becoming resident means getting an RFC (your Mexican tax ID).

What are the Mexican income tax (ISR) rates?

Mexico's personal income tax (ISR) is progressive, running from about 1.9% up to 35% at the top. That sounds high, but it applies to your worldwide income only once you're resident — and US-source income is largely shielded by the treaty and the foreign tax credit (below). Employment income is withheld at source; other income is reconciled in an annual return.

Do US retirees pay tax in Mexico?

Usually very little. The US–Mexico tax treaty (in force since 1994) allocates taxing rights on pensions and Social Security, and the foreign tax credit offsets any Mexican tax against your US bill (and vice versa). In practice, most American retirees living on US Social Security, IRA/401(k) or pension income owe little or no net Mexican tax on it. You still file a US return, and may need to report the income in Mexico depending on your residency.

What is RESICO (for freelancers and small businesses)?

RESICO (Régimen Simplificado de Confianza) is Mexico's simplified regime for individuals with business or professional income up to about MXN 3.5 million/year (~$175,000). It taxes gross revenue at roughly 1% to 2.5% — one of the lowest effective rates available to a self-employed expat. The trade-offs: you register an RFC, issue electronic invoices (CFDI), and it covers Mexican-taxable income, not your US filing.

What US taxes do you still owe?

US citizenship-based taxation never stops:

File a US return every year. The Foreign Earned Income Exclusion ($132,900 in 2026) and the Foreign Tax Credit usually erase any US tax on foreign earned income.
FBAR (FinCEN 114): required if your foreign accounts together exceed $10,000 at any point in the year.
Form 8938 (FATCA): generally required above $200,000 in foreign assets (single, abroad) at year-end, or $300,000 anytime; $400k/$600k if filing jointly.

Note: there is no US–Mexico totalization (Social Security) agreement, so self-employed Americans can face Social Security obligations in both systems — plan for it. This is general information current to June 2026, not tax advice; use a US expat CPA and a Mexican contador.

FAQ

Do US retirees pay Mexican tax?

Usually little or none on US retirement income, thanks to the treaty and foreign tax credit — but you still file with the IRS.

When am I a Mexican tax resident?

When Mexico is your main home, or 183+ days plus your center of vital interests is there — then worldwide income is taxed (ISR up to 35%).

What is RESICO?

A simplified regime taxing gross self-employment revenue at ~1–2.5% up to MXN 3.5M/year — great for freelancers (requires an RFC and e-invoicing).

Expat Cove Editorial Team

We cite SAT, the IRS and the US–Mexico treaty and date our figures. Mexican tax interacts heavily with your US filing — confirm your case with a US expat CPA and a local contador. General information, not advice.

Related guides

Sources

Mexico: SAT (ISR, RESICO, RFC) · US–Mexico treaty
US: IRS FEIE · IRS FBAR vs 8938