2 to 3 months of my gross salary goes to taxes.

If we have been working for a few years, it is no surprise that a large percentage of the salary we sign, or of our gross salary, goes to taxes.

But do you know how much it is and how these gross salary taxes are calculated?

Why does it change every year? 

In some cases, our salaries are even raised and we end up earning less.

And finally, during 20221 and with the adjustment, some workers earned more without a salary increase, just because of the change in the famous limits.

Next, we are going to explain in detail how the famous ISR tables are calculated and used in the payroll; there are more than 20 and it is important to understand which one applies in our cases.

Let's start with the basics, what is ISR?

It is the Income Tax, and it is applied directly to your income, although there are some exceptions.

It applies to individuals and corporations residing in our country, i.e., a portion of the profits obtained is delivered to the Tax Administration Service (SAT) every month, fortnight or day, depending on how we are paid.

It is called "Income Tax" because it is levied on the profit or gain obtained from the performance of an activity. 

That is, in a very broad sense, it is called income the income received by an employee (individual) and the difference of income and deductions authorized for a company (legal entity).

All income earned, deposited or collected generates an income and the employer or company has the obligation to collect the tax from the workers and pay it to SAT.

Steps to calculate ISR

1. Locate the table. Don't worry, we leave the link to the current tables and in that sea we will tell you which one applies depending on how you are paid.
2. Find out what salary range you are in.
3. From what you earn, you subtract it from the lower limit.
4. To this result you apply the percentage indicated in the table.
5. In addition, you must add the fixed fee for the range in which you are located.

Before doing an exercise, we must consider:

The tax is proportional.

In other words, the higher the gross salary, the higher the payment. The minimum payout is 1.9% and the maximum is 35%.

Now, let's take an example of someone earning $10,000 pesos per month.

Step 1: Locate the table

https://wwwmat.sat.gob.mx/cs/Satellite?blobcol=urldata&blobkey=id&blobtable=MungoBlobs&blobwhere=1461174825594&ssbinary=true

Step 2: Check the range

For this example it would be line 4.

Step 3: Subtract

In this case $10,000 - $9.614.67 = $385.33

Step 4: Multiply by the percentage

From the result in "step 3" we multiply by the percentage, which in this case is 16%.

$385.33 x 16% =$ 61.6528

Step 5: Add the fixed fee

For our example, we add the fixed fee, which would be $772.10.

$772.10 + $ 61.6528 = 839.3328

This gives an income tax payable of $839.3328.

Why do we pay these taxes out of our gross salary?

ISR is regulated by the Income Tax Law ( Ley del Impuesto Sobre la Renta, LISR) and Article 1 states that individuals and corporations that are in any of the following situations are obligated to pay the tax:

Individuals residing in Mexico must pay it on all of their income, regardless of the source of wealth from which it derives.

Individuals residing abroad must pay ISR on income earned in a permanent establishment in Mexico.

Foreign residents must pay the tax with respect to income derived from sources of wealth located in Mexico, even if they do not have a permanent establishment in the country or if they do have one, but the income does not come from it. In other words, it is sufficient that the source of wealth is in Mexico.

Individuals residing abroad must pay ISR on income earned in a permanent establishment in Mexico.

Foreign residents must pay the tax with respect to income derived from sources of wealth located in Mexico, even if they do not have a permanent establishment in the country or if they do have one, but the income does not come from it. In other words, it is sufficient that the source of wealth is in Mexico.

Now, at the end of the year there are expenses that we can deduct and get money back, but we will discuss that in another article of our blog magazine; but definitely not everything is bad news, we also have the option of recovering money if we have a mortgage loan, medical expenses, etc.

See you next time.