Is it better to contract or be employed in Mexico?

At $100/hour against a salaried equivalent of $70/hour, 40 hours a week, contracting nets more than employment in Mexico: a contractor keeps about $140,580 against an employee's $116,480, a difference of $24,100. The break-even rate — where the two are equal — is about $83/hour. ISR; the RESICO turnover-based regime can slash it for small earners.

What hourly rate do I need to charge in Mexico?

To take home $100,000 a year after tax, health cover and unpaid time, you need roughly $95/hour, or a day rate around $762. That assumes $137,162 of gross revenue across 1440 billable hours.

Why is the contractor tax rate in Mexico different from the employee rate?

A contractor usually pays both halves of social contributions where an employer would otherwise pay one, and often buys health cover privately. Here that works out at about 27% effective for a contractor against 20% for an employee. ISR; the RESICO turnover-based regime can slash it for small earners.

How accurate are these Mexico figures?

The employee rate used here is 20%. The OECD's Taxing Wages series independently reports 13.2% of gross pay going to income tax plus employee social contributions for a single person on the average wage in 2025, and 9.6%–17.1% across earnings from two-thirds to two-thirds again above that. The rate here is checked against that range on every build and a figure outside it fails. It is still one blended rate where a real system has brackets, so treat it as an estimate: your actual liability depends on your regime, deductions and region.

Contracting · Mexico

Contractor or employee in 🇲🇽 Mexico?

At $100/hour, contracting nets more than employment — the break-even rate is about $83/hour.

Side by side at $100/hour

	Contractor	Employee
Gross	$192,000	$145,600
Tax	$49,920	$29,120
Health insurance	$1,500	—
Net	$140,580	$116,480
Effective rate	27%	20%

ISR; the RESICO turnover-based regime can slash it for small earners. Run your own rate in the interactive calculator.

To take home $100,000 a year

You need to charge about $95/hour (day rate $762), billing 1440 hours across the year for $137,162 of gross revenue.

Change the target in the required-rate calculator.

Checked against the OECD

This page uses an employee rate of 20%. The OECD's Taxing Wages series independently puts income tax plus employee social contributions at 13.2% of gross pay for a single person on the average wage in 2025 — and the full tax wedge, which adds what the employer pays on top, at 21.6% of total labour cost.

The rate above is checked on every build against the range OECD measures across earnings from two-thirds of the average wage to two-thirds again above it, and a figure outside that range fails the build. The two are not expected to match exactly: this site carries one blended rate where a real system has brackets.

Countries with a similar contracting premium

🇩🇰 Denmark — +19% for contracting
🇳🇱 Netherlands — +19% for contracting
🇹🇷 Türkiye — +19% for contracting
🇦🇷 Argentina — +19% for contracting

Questions

Is it better to contract or be employed in Mexico?: At $100/hour against a salaried equivalent of $70/hour, 40 hours a week, contracting nets more than employment in Mexico: a contractor keeps about $140,580 against an employee's $116,480, a difference of $24,100. The break-even rate — where the two are equal — is about $83/hour. ISR; the RESICO turnover-based regime can slash it for small earners.
What hourly rate do I need to charge in Mexico?: To take home $100,000 a year after tax, health cover and unpaid time, you need roughly $95/hour, or a day rate around $762. That assumes $137,162 of gross revenue across 1440 billable hours.
Why is the contractor tax rate in Mexico different from the employee rate?: A contractor usually pays both halves of social contributions where an employer would otherwise pay one, and often buys health cover privately. Here that works out at about 27% effective for a contractor against 20% for an employee. ISR; the RESICO turnover-based regime can slash it for small earners.
How accurate are these Mexico figures?: The employee rate used here is 20%. The OECD's Taxing Wages series independently reports 13.2% of gross pay going to income tax plus employee social contributions for a single person on the average wage in 2025, and 9.6%–17.1% across earnings from two-thirds to two-thirds again above that. The rate here is checked against that range on every build and a figure outside it fails. It is still one blended rate where a real system has brackets, so treat it as an estimate: your actual liability depends on your regime, deductions and region.

Estimates for comparison, not tax advice. Effective rates are blended, not bracket-by-bracket except where noted, and every country has regimes and deductions a single rate cannot express.