In accordance with the provisions of article 87 of the Federal Labor Law, workers They are entitled to an annual bonus that must be paid before December 20, and will be equivalent to fifteen days’ salary, at least, that is, the employer may grant a higher bonus if he so decides.

In the case of workers who have not completed the year of service, they will have the right to be paid the proportional part of the bonus, according to the time worked, regardless of whether they are working or not on the date of settlement of the bonus.

To calculate the bonus, the daily salary is considered, that is, the one that workers ordinarily receive for a working day.

When the salary is variable, an average of the perceptions obtained must be calculated to determine the daily quota with which the bonus will be calculated.

Income tax exemption for the worker

Article 93, section XIV of the Income Tax Law, states that the bonus is exempt from income tax for the worker who receives it, up to the equivalent of 30 times the UMA.

Therefore, the amount exempted from the bonus paid in 2020 is $ 2,606.40 (30 x $ 86.88) and the corresponding tax will be paid on the excess.

Income tax withholding calculation

To calculate the tax, it is recommended to compare the normal procedure of article 96 of the Income Tax Law and the procedure of article 174 of the Regulation of the same Law, which is as follows:

a) The taxable bonus is divided by the annual factor of 365 days and the result is multiplied by 30.4,      resulting in an average monthly bonus.

b) The ordinary monthly salary of the worker is added to the average monthly bonus.      

c) The result will be calculated the tax applying the procedure established in article 96 of the Income Tax Law.

d) The tax corresponding to the last ordinary monthly salary will also be calculated.        

e) The difference between the taxes calculated according to sections c) and d) above is obtained and it is divided by the average monthly bonus obtained according to section a) to obtain a rate.        

f) The taxable bonus is multiplied by the rate calculated in the previous paragraph to determine the income tax to retain the worker.

It should be noted that the normal calculation with article 96 of the Income Tax Law, is more convenient for low income levels, that is, those that are located in the first ranges of the table, and the higher the amount of the bonus, the more convenient use the procedure indicated in article 174 of the Regulation of the Law.

Income tax withholding calculation example

Worker data:

Monthly income $ 30,000
Christmas bonus paid $ 20,000

Deduction of the bonus by the employer

In the case of the bonus, the limitation on the deduction of the expenses made by the employer, which in turn are exempt income for the worker, as established in section XXX of Article 28, therefore the amount of the exempt bonus for the workers. It can only be deducted by applying the factor of 0.47 or 0.53, as the case may be, on said amount. It is worth clarifying that the amount of the Christmas bonus taxed for workers will be deductible for the employer in its entirety.

The applicable factor (0.47 or 0.53) must be calculated at the close of fiscal year 2020, in accordance with the procedure provided in Rule of the current RMF and it will depend on whether the exempt benefits granted to workers have decreased or not, with respect to those granted in the previous year.