Background on the Mexican Christmas Bonus (Aguinaldo)
In Mexico, the Christmas bonus, or “aguinaldo,” is a significant part of workers’ annual compensation. It is typically equivalent to one or more weeks’ salary and is distributed in December, coinciding with the Christmas season.
Debunking the Rumors
Recently, rumors circulated on social media claiming that the Mexican tax authority would impose a new tax on workers’ Christmas bonuses. However, both experts and the federal government have denied these claims, as no new initiative, reform, or provision for such a tax has been introduced.
Jorge Paz Solís, a tax expert and member of the Fiscal Development Commission at the Mexican Public Accountants College, clarified: “There are no changes in the tax calculation or any additional taxes; the same mechanism has been used for several years.”
Current Tax Regulations on Aguinaldos
According to Article 93 of the Income Tax Law (ISR), Christmas bonuses are exempt from taxation up to the equivalent of 30 Units of Measurement and Update (UMAs) daily, which is approximately 3,394.20 Mexican pesos.
Only when an individual receives a Christmas bonus exceeding this amount, the excess portion is subject to ISR taxation. For instance, if a worker receives a 5,000-peso Christmas bonus, the first 3,394.20 pesos would be tax-free, while the remaining 1,605.80 pesos would be taxed according to the rates outlined in Anexo 8, Article 96 of the ISR.
Historical Context and Legal Requirements
The mechanism for taxing Christmas bonuses has been in place since the 1980s, with a portion of the bonus being tax-free and the rest subject to taxation. As the UMA is updated annually, the tax-free portion of the Christmas bonus increases over time.
By law, all workers in Mexico are entitled to receive a Christmas bonus equivalent to at least 15 days’ worth of their salary. The deadline for receiving the Christmas bonus is December 20th.
If an employee worked throughout the entire year at the same company, their employer must provide them with a Christmas bonus equivalent to at least 15 days’ salary. However, if an employee joined or left a company during the year, they are entitled to a proportional Christmas bonus based on their period of employment.
Key Questions and Answers
- Q: Is there a new tax on Christmas bonuses this year? A: No, there is no new tax on Christmas bonuses. Both experts and the federal government have denied these rumors.
- Q: What is the tax-free limit for Christmas bonuses? A: The tax-free limit for Christmas bonuses is approximately 3,394.20 Mexican pesos, equivalent to 30 Units of Measurement and Update (UMAs) daily.
- Q: How are Christmas bonuses taxed? A: Only the portion of the Christmas bonus exceeding the tax-free limit is subject to the Income Tax (ISR), with tax rates outlined in Anexo 8, Article 96 of the ISR.
- Q: Are Christmas bonuses mandatory for all workers in Mexico? A: Yes, by law, all workers in Mexico are entitled to receive a Christmas bonus equivalent to at least 15 days’ worth of their salary.
- Q: What is the deadline for receiving the Christmas bonus? A: The deadline for receiving the Christmas bonus is December 20th.
