Moving to Mexico: What to Expect as a US Expat

moving to mexico US expat

Have you ever thought about leaving the US behind to move to Mexico? You’re not alone. There are already an estimated 1.5 million Americans that call the Central American country home. 

Not all of these Americans come to Mexico for the same thing. Some come to enjoy their golden years under the hot sun, some for the food, others for the low cost of living … each expat has their unique reasons for relocating to Mexico. 

Regardless of what you’re looking for in Mexico, this article will give you a basic overview of what you can expect once you arrive in the country. You’ll learn essential information, such as why you should consider moving to Mexico, safety considerations while living in the country, and how much tax you’ll be obligated to in Mexico. 

5 reasons to move to Mexico

Mexico has been the most popular destination among US expats for decades now. Here’s why:

1. Lower cost of living

A significant benefit of living in Mexico is that your money goes further than in the States. According to My Life Elsewhere, Mexico is 50.6% less expensive than the United States. 

As the world goes through a period of inflation, a US income still allows you to live a comfortable lifestyle in Mexico, making it an attractive destination for digital nomads and retirees. US expats in Mexico can expect to live comfortably with a monthly income of $1500 – $2500, sometimes less depending on their location. 

2. Enjoyable climate for all

Mexico has a climate for everyone. If you’re looking for warmer, sunny weather year-round, you can go to the southeast of Mexico to enjoy a tropical environment in places such as Quintana Roo or Yucatan. Or, if you want a more temperate climate, you can move to one of Mexico’s cities at a high elevation, such as the capital Mexico City.

3. Proximity to the US

It’s common for expats to feel homesick while living overseas. Thankfully, the proximity between Mexico and the US makes it easy to come back to visit friends and family. On top of many direct airline flights between Mexican and American cities, you also have the option to cross the border by car to get back home. 

4. Rich cuisine

Mexico is home to some of the most delightful cuisine in the world, making it an excellent place for food lovers. Its most popular dishes include tostadas, chilaquiles, guacamole, and tacos. 

5. Warm, welcoming culture

Mexico has a reputation for being a very hospitable place that’s welcoming toward foreigners. According to a survey run by InterNations, 90% of expats in Mexico describe the locals as friendly, and 70% of them find it easy to make friends with other Mexicans.  

Will I need to learn Spanish while living in Mexico? 

It’s worth noting that outside of the touristic areas, locals don’t widely speak English across Mexico. Learning a bit of Spanish will therefore help you a lot as you assimilate into the culture. 

How does the healthcare system in Mexico work? 

Mexico provides universal healthcare to all of its residents. According to the Statista Research Department, Mexico’s healthcare system has a health index score of 72.7, slightly below the US, which has a health index of 73.9. 

Residents in Mexico also have the option to pay for an insurance plan that gives them access to private healthcare facilities. Private care is much more affordable than in the US, with insurance plans costing around $300 to $500 per month. 

What are Mexico’s tax rates? 

To our friends in Mexico - our specialization is in US tax! 
Though we have a great understanding of how foreign tax overlaps with the States, we cannot provide expert advice on non-US taxes when booking consultations or tax prep services.

If you plan to move to Mexico, you may wonder how much tax you’ll have to pay. Here’s a table that shows how Mexico taxes its residents based on their income:

Income in Mexican pesos ($MXN)Tax rate
1 to 7,735.001.92%
7,735.01 to 65,651.076.4%
65,651.08 to 115,375.9010.88%
115,375.91 to 134,119.4116%
134,119.42 to 160,577.6517.92%
160,577.66 to 323,862.0021.36%
323,862.01 to 510,451.0023.52%
510,451.01 to 974,535.0330%
974,535.04 to 1,299,380.0432%
1,299,380.05 to 3,898,140.1234%
Over 3,898,140.1235%

Important note about taxes in Mexico as a US expat: 

The US is one of the few countries in the world that applies citizenship-based taxation, which means that American expats must declare their worldwide income to the IRS each year, regardless of where they live. And under US FATCA regulations, Mexican banks are required to report the financial banking activities of US expats in their country.

If you don’t file a US tax return while in Mexico, it can lead to hefty penalties. However, you don’t have to worry about being double-taxed. Many tax relief programs available to Americans living abroad can help you avoid paying taxes twice on the same income, such as the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC)

Read More: What is Citizenship-Based Taxation?

Moving to Mexico: A Quick Checklist

Moving to Mexico is an exciting opportunity but requires good preparation. Here’s a quick checklist to make your move to Mexico as streamlined as possible:

  • Research where you’d like to live in Mexico: There are various climates in Mexico, so think about what would suit you best. For example, Cancun or Playa Del Carmen may be for you if you enjoy year-round sun. 
  • Learn some Spanish: A basic understanding of Spanish will help you immensely during your move to Mexico. Try to learn enough Spanish for day-to-day activities, such as going shopping in local markets.  
  • Apply for a visa: If you plan to stay in Mexico for longer than 180 days, you’ll need to apply for a visa. Check out this resource from the Mexican embassy to learn more about your visa options
  • Make sure to stay compliant with your US tax obligations: Even while in Mexico, you’ll still need to file a US tax return to declare your worldwide income. But if you don’t want to deal with all the paperwork, you can always hire a US expat tax expert like Bright!Tax that handles all the filing for you. 

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