Banking, pensions and tax in Mexico
Mexico taxes pensions from abroad as part of a resident's worldwide income, at up to 35%, but US Social Security paid to a Mexican resident is taxable only in the US.
How your pension reaches a Mexico bank, what Mexico taxes, and what you still report at home. Checked against official sources on Oct 7, 2026.
- Tax on a foreign pension
- Up to 35% Foreign pensions taxed; US Social Security is not. PwC Tax Summaries; US-Mexico tax treaty. Checked Oct 7, 2026.
- Top rate, local income
- 35.00% Over MXN 5,107,703.92. PwC Tax Summaries; US-Mexico tax treaty. Checked Oct 7, 2026.
- US Social Security
- Direct deposit SSA POMS. Checked Oct 7, 2026.
- UK State Pension
- Frozen GOV.UK. Checked Oct 7, 2026.
- Canada OAS
- Agreement in force Canada.ca. Checked Oct 7, 2026.
- US FBAR
- Over $10,000 Combined foreign accounts at any time in the year. FinCEN. Checked Oct 7, 2026.
Getting your pension paid in Mexico
United States
Social Security
Yes. Social Security can be paid straight into a bank in Mexico by international direct deposit, routed through the Federal Reserve and the Bank of Mexico. It must go to a Mexican peso checking account or a debit card account; savings accounts and US dollar accounts in Mexico cannot receive it.
SSA POMS. Checked Oct 7, 2026.
United Kingdom
State Pension
It can be paid into a bank in Mexico or a UK account, but Mexico is not on GOV.UK's list of countries where the State Pension goes up every year, so it stays at the rate first paid in Mexico.
GOV.UK. Checked Oct 7, 2026.
Canada
Old Age Security
Paid while you live outside Canada if you lived in Canada for at least 20 years after age 18. Canada and Mexico have a social security agreement, in force since May 1, 1996: periods credited under Mexico's pension program count as residence in Canada when you qualify for OAS.
Canada.ca. Checked Oct 7, 2026.
Other countries: check whether your pension can be paid abroad, whether it keeps rising with inflation there, and whether your country has a social security agreement with Mexico.
How Mexico taxes you
You are a Mexican tax resident once you set up your home in Mexico; if you also have a home elsewhere, it depends on where your centre of vital interests is. Residents pay income tax on worldwide income, whatever their nationality, at 1.92% to 35%. Under the US-Mexico tax treaty, US Social Security and other US public pensions paid to a resident of Mexico are taxable only in the US. The income tax scale:
| Taxable income | Rate |
|---|---|
| Up to MXN 10,135.11 | 1.92% |
| MXN 10,135.12 to 86,022.11 | 6.40%, plus MXN 194.59 |
| MXN 86,022.12 to 151,176.19 | 10.88%, plus MXN 5,051.37 |
| MXN 151,176.20 to 175,735.66 | 16.00%, plus MXN 12,140.13 |
| MXN 175,735.67 to 210,403.69 | 17.92%, plus MXN 16,069.64 |
| MXN 210,403.70 to 424,353.97 | 21.36%, plus MXN 22,282.14 |
| MXN 424,353.98 to 668,840.14 | 23.52%, plus MXN 67,981.92 |
| MXN 668,840.15 to 1,276,925.98 | 30.00%, plus MXN 125,485.07 |
| MXN 1,276,925.99 to 1,702,567.97 | 32.00%, plus MXN 307,910.81 |
| MXN 1,702,567.98 to 5,107,703.92 | 34.00%, plus MXN 444,116.23 |
| Over MXN 5,107,703.92 | 35.00%, plus MXN 1,601,862.46 |
PwC Tax Summaries; US-Mexico tax treaty. Checked Oct 7, 2026.
What US citizens still report
US citizens file a US return on worldwide income wherever they live; the US has an income tax treaty with Mexico, which can decide which country taxes some income. Two reports cover money held abroad:
| FBAR (FinCEN Form 114) | Over $10,000 combined, any time |
| Form 8938, single, living abroad | Over $200,000 at year end or $300,000 any time |
| Form 8938, married filing jointly | Over $400,000 at year end or $600,000 any time |
FinCEN; IRS. Checked Oct 7, 2026.
Pension and tax questions
Can I get US Social Security paid in Mexico?
Yes. Social Security can be paid straight into a bank in Mexico by international direct deposit, routed through the Federal Reserve and the Bank of Mexico. It must go to a Mexican peso checking account or a debit card account; savings accounts and US dollar accounts in Mexico cannot receive it.
Will my UK State Pension go up each year in Mexico?
It can be paid into a bank in Mexico or a UK account, but Mexico is not on GOV.UK's list of countries where the State Pension goes up every year, so it stays at the rate first paid in Mexico.
Is my pension taxed in Mexico?
Yes. Mexico taxes residents on worldwide income, so a pension from abroad is taxed at 1.92% to 35%. US Social Security is the exception: under the US-Mexico tax treaty it is taxable only in the US. US citizens still file a US return.
Do I still file a US tax return?
Yes, US citizens file on worldwide income wherever they live, and report foreign accounts on an FBAR once they pass $10,000 combined at any point in the year.
Does Mexico tax Social Security for retired expats?
No. Under the US-Mexico tax treaty, US Social Security benefits paid to a resident of Mexico are taxable only in the US. Other foreign pensions are part of worldwide income, taxed at 1.92% to 35%.
If I retire in Mexico, should I open a Mexican bank account?
You need one for Social Security direct deposit: payments go only to a Mexican peso checking account or a debit card account at a bank in Mexico, not to a savings or US dollar account.
Can I receive my UK State Pension in Mexico?
Yes, in a Mexican or UK bank, but it is frozen: Mexico is not among the countries where the UK pays yearly increases.
