Year-End Payroll Checklist for Mexico (2026)

Closing payroll for the year in Mexico is not a one-day task. It spans six weeks, touches multiple government agencies, and involves obligations most foreign employers have never encountered.

Miss one deadline and you are looking at penalties from IMSS, SAT, or both.

This checklist covers every year-end payroll obligation in Mexico, organized by deadline so nothing gets missed.

Key Takeaways

October to November: Clean Up Before December Hits

Most year-end problems are October problems that went unnoticed. Use Q4 to audit records and fix issues while there is still time.

Validate Employee Records

Pull your full employee roster and confirm that each person's RFC, CURP, registered name, and address match exactly what is on file with SAT and IMSS.

A single mismatch on a CFDI or IMSS filing triggers a correction process. It is far easier to fix in October than in February.

Reconcile SBC Changes

The SBC (Salario Base de Cotización) is the integrated daily salary used to calculate IMSS contributions. Every salary change during the year must be reported to IMSS within five business days.

Run an audit from January through October. Correct any unreported changes now before IMSS surfaces them. The rules for SBC recalculation in Mexico determine exactly what must be reported and when.

Check Variable Wages

Employees on commissions or variable pay have an SBC that shifts every bimestre. Confirm the variable component was calculated correctly for each bimonthly period.

Errors here flow directly into the IMSS sixth bimestre close in December.

Lock Down Your December Payroll Calendar

Banks close early between December 25 and January 1. Most payroll providers need submissions by December 11 to guarantee processing on December 16 and December 26.

Get your provider's exact cutoff dates and communicate them to HR and finance now.

Confirm ISN Is Current in Every State

The Impuesto Sobre Nóminas (ISN) is a state-level payroll tax. Rates range from roughly 1% to 4% depending on the state, and each state administers its own filings and deadlines.

If you have employees across multiple states, confirm you are current in all of them. ISN sits alongside several other employer tax responsibilities in Mexico that also require monitoring at year-end. Falling behind in one state creates a compounding balance that is expensive to clear.

Start Modeling PTU

PTU (profit sharing) is not due until May 30, but the calculation uses your taxable income declared to SAT for the current year.

Start working with your accountant now to estimate the liability. Companies that wait until April frequently face a number their budget cannot absorb.

December 1 to 19: Aguinaldo

The first three weeks of December belong entirely to aguinaldo. This is Mexico's most scrutinized payroll obligation, and the STPS enforces it aggressively.

Under Article 87 of the Federal Labor Law (LFT), every employee is entitled to a minimum of 15 days of salary as an annual Christmas bonus, paid no later than December 20.

The full rules around mandatory aguinaldo in Mexico, including calculation examples and prorated scenarios, are covered in detail in our dedicated article.

How to Calculate Aguinaldo

• Full-year employees: Daily salary multiplied by a minimum of 15 days.

• Partial-year employees: Prorated based on days worked from January 1 (or hire date) through December 20.

• Variable wage employees: Use the average daily salary from the prior 12 months, or from the period worked if under one year.

ISR on Aguinaldo

The first 30 times the daily UMA value is exempt from income tax. Any amount above that threshold is taxable and requires ISR withholding.

The CFDI de Nómina for the aguinaldo must correctly split the exempt and taxable portions in the XML using SAT's nómina complement (complemento de nómina 1.2). Getting this wrong disallows the payment as a deductible business expense.

The most frequent aguinaldo reporting errors in Mexico involve exactly this CFDI misclassification, and they are avoidable with the right payroll setup.

A Note on Enhanced Aguinaldo

Many companies pay more than the legal 15-day minimum, offering 20, 25, or 30 days. Whatever amount you establish becomes the binding company standard. You cannot reduce it in future years without employee consent.

December 20 to 31: Final Payroll and Year-Close

With aguinaldo done, the final ten days of December are about closing everything cleanly before the fiscal year ends.

Process All Remaining Payroll

Complete the second regular December payroll, covering December 16 to 31 and paying on December 26. Include all pending commissions, overtime, and variable pay.

Income earned in December but paid in January shifts into the new tax year, which directly affects ISR calculations.

Pay Proportional Vacation Premiums for Departing Employees

Employees who separated in Q4 are owed proportional vacation days plus the 25% vacation premium (prima vacacional). Verify these were paid and documented before December 31.

Close the Sixth IMSS Bimestre

The sixth bimonthly period covers November and December and closes at year-end. Reconcile the IMSS contributions for this period, paying close attention to employees with variable wages.

The variable component of the SBC for the sixth bimestre is based on average variable earnings from the prior six months. Any error here flows into the IMSS annual wage reconciliation in Q1. Understanding the full IMSS employer and employee contribution structure makes it easier to spot bimestral discrepancies before they compound.

Run the Full CFDI Audit

Download every CFDI de Nómina issued during the year from SAT's portal. For each receipt, confirm:

• The receipt is stamped (timbrado) with a valid SAT seal

• The amounts match exactly what is in your payroll system

• Exempt and taxable portions of special payments are correctly classified

• No CFDI was cancelled by mistake

An unstamped or mismatched CFDI cannot be deducted as a business expense. If you are new to Mexico's invoicing system, what CFDI means in Mexico and how the timbrado stamp works is explained in full in our dedicated article.

Reconcile INFONAVIT Deductions

For employees with active INFONAVIT housing loan deductions, confirm the total withheld during the year matches what was reported to the fund. INFONAVIT runs audits in Q1 and discrepancies trigger correction notices with their own penalty structure.

How housing fund contributions in Mexico are calculated and remitted is covered in detail if you need to verify your deduction methodology.

Reconcile FONACOT Deductions

If any employees have FONACOT (worker credit fund) loans, verify all deductions were remitted correctly and your year-end balance matches FONACOT's records.

Update SBC Before January 1

Mexico adjusts the minimum wage every January 1. The new floor directly affects the SBC for all employees earning at or near that level. Any employee below the new floor needs their SBC updated before the first January payroll.

Processing January payroll with a below-floor SBC creates an underpayment IMSS will catch. For context on where the current floor stands, see our minimum wage in Mexico guide.

Bank holiday warning: Payroll transfers that normally clear overnight may take two to three days between December 25 and January 1. Pay on December 26 at the latest to guarantee settlement before the holiday window closes.

January: The ISR Annual Calculation

The ISR annual calculation (cálculo anual del ISR) is the most technically demanding year-end task in Mexican payroll. Mexico's tax law requires employers to act as withholding agents throughout the year, and at year-end they must run a formal reconciliation for every employee.

For a full primer on how income tax withholding works in Mexico, see our guide on employee tax withholding in Mexico.

How the Cálculo Anual Works

Step 1 — Aggregate all taxable income. Total every taxable payment made to each employee: base salary, variable compensation, taxable aguinaldo, taxable vacation premiums, and any other taxable amounts paid during the year.

Step 2 — Apply the annual ISR table. Use SAT's annual income tax rate brackets to calculate the gross ISR owed for the full year.

Step 3 — Subtract ISR withheld. Deduct all ISR withheld across every payroll period during the year.

Step 4 — Reconcile the subsidio al empleo. The employment subsidy reduces or eliminates ISR for employees earning up to MXN 9,081 per month. The subsidy applied throughout the year must be reconciled against the annual calculation.

Step 5 — Settle the difference. If too much ISR was withheld, the excess is refunded to the employee in the next payroll. If too little was withheld, the balance is deducted from an upcoming paycheck.

For a plain-language explanation of how ISR works in Mexico, see our guide on what ISR is and how it applies to employees.

Who Is Exempt from the Employer Calculation

Employees who received income from more than one employer during the year, or who earned more than MXN 400,000 annually, must file their own annual return directly with SAT by April 30. They are excluded from the employer cálculo anual.

The results of the calculation must be reflected in the CFDI de Nómina for the adjustment period with the correct XML fields for annual adjustments.

February: Constancia, Annual Return, and Reconciliations

Three major obligations come due before February 28.

Issue the Constancia de Percepciones y Retenciones

Every employer must give each employee a Constancia de Sueldos, Salarios, Crédito al Salario y Retenciones by February 28. This document covers:

• Total gross income for the prior calendar year

• Total ISR withheld

• Employment subsidy (subsidio al empleo) applied

• Employee-side IMSS and INFONAVIT contributions

Employees who file an individual SAT return by April 30 cannot complete it without this document. Issuing it late is an employer violation.

Our guide on Mexico's annual individual tax declaration explains exactly how employees use the constancia when filing their return, which helps you understand why the February 28 deadline is non-negotiable.

File the Declaración Informativa de Sueldos y Salarios

Employers must submit an annual information return to SAT covering all compensation, withholdings, and subsidies paid during the prior year.

Employers who issued a CFDI de Nómina for every payroll payment are generally considered to have satisfied this automatically, since SAT already holds the data from the timbrado process. Confirm with your payroll provider whether a separate filing is still required under your specific tax regime.

Complete the IMSS Annual Wage Reconciliation

IMSS requires employers to reconcile total wages declared for social security purposes against the company's accounting records. The reconciliation must tie three figures:

1. Total payroll per accounting records

2. Total SBC declared to IMSS for the year

3. Total compensation per the annual ISR return

Discrepancies between these three numbers are the most common trigger for IMSS audits. The common payroll audit errors in Mexico that generate the most IMSS notices are almost always reconciliation mismatches between these figures.

PTU: Profit Sharing Due in May

PTU is not a December obligation, but getting it right starts at year-end.

Under Article 122 of the LFT, employers must distribute 10% of taxable annual profit to eligible employees by May 30 (June 29 for individual filers).

The taxable profit used in the PTU calculation comes directly from the annual tax return filed with SAT. The decisions your accountant makes in March and April determine what employees receive in May.

How profit sharing in Mexico (PTU) is calculated, who qualifies, and how the distribution works is covered in full in our dedicated article.

What to do at year-end to prepare:

• Work with your accountant to model expected taxable profit using Q3 and Q4 financials

• Track eligible employee days and wages accurately through December 31

• Identify excluded employees: directors, general managers, and those above the statutory PTU cap are excluded or limited by law

At Human Resources Mexico, we cover PTU directly. The liability does not pass through to the client company, eliminating the most common financial surprise foreign employers face in the spring.

Year-End Deadline Reference

The Most Costly Year-End Mistakes Foreign Employers Make

These are the errors that generate real penalties, not hypothetical ones.

Paying aguinaldo after December 20. STPS fines range from 50 to 5,000 times the daily UMA value per employee per violation. Across even a small team, that number adds up fast.

Skipping the ISR annual calculation. Employees carry an underpaid ISR balance they did not know about. This generates SAT complaints and sometimes labor claims against the employer.

Misclassifying the aguinaldo CFDI. Failing to correctly split the exempt and taxable portions in the XML means the entire payment may be disallowed as a corporate tax deduction.

Not updating SBC before January 1. The first IMSS bimestre runs January through February. An SBC below the new minimum wage floor triggers corrections and potential late contribution fees for the entire period.

Issuing the constancia late. Employees who cannot file their April 30 SAT return because they never received their constancia will file complaints. SAT treats this as an employer violation regardless of the reason.

Letting ISN fall behind in one state. Each state runs its own collection and penalty process. One missed month in one state creates a compounding balance that grows quietly until it is expensive to clear.

How We Handle Year-End Payroll for Foreign Companies

Year-end payroll in Mexico requires fluency in LFT obligations, SAT's CFDI system, IMSS bimestral timing, and 32 separate state ISN regimes.

For foreign companies without a local finance team, managing all of it independently is genuinely difficult.

At Human Resources Mexico (HRM), we handle every year-end obligation for the companies we serve:

• Aguinaldo: Calculated, paid before December 20, and CFDI correctly structured for every employee.

• CFDI audit: Every receipt issued through our system is timbrado, XML-validated, and retrievable from SAT.

• ISR cálculo anual: Run for every eligible employee in January, with all adjustments settled in the first payroll of the new year.

• Constancia: Delivered to every employee by February 28 without exception.

• PTU: We cover PTU directly. No May surprise lands on your books.

• IMSS and INFONAVIT: We handle the sixth bimestre close and all social security filings on your behalf.

• ISN compliance: Managed in every state where your employees work.

With 17 years of physical presence in Mexico, we know exactly what SAT and IMSS expect, and we handle it before you need to ask.

• Get a proposal tailored to your team size and location.

• Run the Mexico ISR calculator to estimate each employee's annual tax position before the cálculo anual runs.

• Get instant answers through the Mexico EOR Specialist AI Chatbot for any compliance question, any time.

Year-End Payroll Mexico FAQ

When is aguinaldo due in Mexico?

No later than December 20 each year. The legal minimum is 15 days of salary under LFT Article 87.

What happens if aguinaldo is paid late?

STPS fines range from 50 to 5,000 times the daily UMA value per affected employee. Employees can also file a labor complaint with the Labor Conciliation Center or Labor Courts.

What is the ISR annual calculation?

The year-end reconciliation where the employer compares total ISR withheld during the year against each employee's actual annual tax liability, then refunds or collects the difference.

What is the subsidio al empleo?

A tax credit applied by the employer that reduces or eliminates ISR for lower-income employees. It must be reconciled as part of the ISR annual calculation.

What is the Constancia de Retenciones and when is it due?

The annual certificate showing each employee's total income and withholdings for the prior year. Employers must issue it by February 28.

What is the CFDI de Nómina and why does it need a year-end audit?

It is the mandatory electronic payroll receipt SAT requires for every employee payment. A year-end audit confirms all receipts are stamped correctly and match payroll records.

What is the SBC and why audit it at year-end?

The SBC is the integrated daily salary used for IMSS contributions. Any salary change must be reported to IMSS within five days. A year-end audit catches any unreported changes before IMSS does.

What is ISN and who pays it?

A state-level payroll tax on total wages. Rates range from roughly 1% to 4% depending on the state. Employers with employees across multiple states file separately in each one.

What is PTU and when is it due?

Mandatory profit sharing. Employers distribute 10% of taxable annual profits to eligible employees by May 30 of the following year.

Does Mexico require an annual payroll information return?

Yes. The Declaración Informativa de Sueldos y Salarios is due in February. Employers who issued CFDI de Nómina for all payments may have this satisfied automatically but should confirm with their payroll provider.

Do employees who left during the year get aguinaldo?

Yes. Departing employees receive a prorated aguinaldo based on days worked during the calendar year.

What is the IMSS sixth bimestre?

The sixth bimonthly period covers November and December. It closes at year-end and must be reconciled, including variable wage adjustments, before the period ends.