What are extraordinary retirement contributions?
Extraordinary retirement contributions are a form of savings that can provide tax benefits in Mexico. These contributions are divided into three types:
long-term contributions
This type of savings is tax deductible in the annual declaration of the corresponding fiscal year. However, the investment must remain in your Individual Account for a minimum of 5 years for the tax deductibility stimulus to apply.
Complementary retirement
Complementary withdrawal contributions are also tax deductible on your annual return, but must remain invested in your Individual Account for 5 years. In addition, these contributions must continue to be invested until you reach age 65, at which time the tax exemption benefit will apply.
Long-term investment perspective
These contributions are additional to your Individual Account and allow you to supplement your retirement savings. You can deduct these contributions from your cumulative income on your tax return. Like the other modalities, they must remain invested until the age of 65 for the tax exemption benefit to apply.
How much can I deduct for retirement contributions?
In accordance with the Income Tax Law (ISR) in Mexico, the amount of deductible contributions is up to 10% of your cumulative income. However, this amount cannot exceed the amount of 163,467 pesos saved voluntarily.
It is important to note that the maximum limit to be deducted cannot exceed 15% of all personal deductions combined with other concepts, such as donations or medical expenses. In the case of deposits in special savings accounts, the maximum amount to be deducted is $152,000 pesos.
Example:
If income of one million pesos was obtained, a maximum of 100,000 pesos may be deducted if you have contributed exclusively to this item and no deduction for donations or medical expenses. If you had income of 2 million pesos or more, you can only deduct up to a voluntary savings amount of 163,467 pesos as long as it was the only thing to deduct.
Minimum saving time
In addition, it is essential to take into account that the tax benefit will not apply if you decide to withdraw your extraordinary retirement contributions before completing 5 years of investment.