2024 Christmas Bonus Tax Update: What You Need to Know

As the year draws to a close and the festive season approaches, many people in Mexico are eagerly awaiting their Christmas bonus.

The Christmas bonus, a labor right enshrined in Article 87 of the Federal Labor Law, is a payment that workers are entitled to receive. The deadline for this payment is December 20, so it's an important date to remember.

The bonus is typically equivalent to at least 15 days of salary and is usually paid net, meaning it's free of deductions for workers.

However, not all workers are exempt from paying taxes on this additional income, which can cause some confusion.

The Tax Administration Service (SAT) has clarified that the tax on the Christmas bonus is calculated based on the worker's gross income.

While regular salary is already taxed via the income tax (ISR), the Christmas bonus is considered additional income and may also be subject to taxes.

This means that depending on a worker's total income level, they may need to pay taxes on their Christmas bonus.

In addition to the Christmas bonus, there are certain types of income that are tax-free.

These include minimum statutory benefits based on the minimum wage, labor risk indemnities, retirements, pensions, retirement salaries, social programs, medical expense refunds, and justified per diems.

The SAT provides detailed information to help workers understand how the tax on the Christmas bonus is calculated and which types of income are tax-free.

This information is vital for employees to effectively manage their finances during the holiday season.

Starting in 2024, workers in Mexico who receive a Christmas bonus exceeding 30 Measurement and Updating Units (UMA), or more than 3,257.10 pesos, will be required to pay taxes on that additional income.

This rule, introduced by the SAT, is designed to ensure that only those with higher incomes contribute to the treasury, while shielding lower-income employees from a significant tax burden.