Why Americans are moving to Mexico
For a US salary, most of Mexico is a real and sustained cost-of-living drop, especially outside Mexico City’s most expat-dense blocks, and it’s a direct flight from most of the country, often two to four hours.
Mexico City has become the default landing pad: dense, walkable neighbourhoods like Roma and Condesa, a huge remote-work and creative scene, and one of the largest expat populations of any city in Latin America. Puerto Vallarta, Playa del Carmen, Mérida, and Oaxaca each pull a different type of mover, beach-and-coworking, family-friendly, colonial-city-and-slower-pace.
The structural pull is proximity plus cost. The structural friction is the same one every American abroad has: the IRS follows you.
What visa do you need to move from the US to Mexico?
For stays up to 180 days, US citizens enter Mexico with a free tourist permit, the FMM (Forma Migratoria Múltiple), issued on arrival. No advance visa needed.
For longer stays, the standard route is the Temporary Resident Visa. As of 2026, consulates set the financial threshold using Mexico’s UMA (Unidad de Medida y Actualización) rather than the old Mexico City minimum-wage benchmark, a change that took effect in mid-2025. In practice that works out to roughly:
- ~$4,300–4,500 USD/month in verifiable income (employment or pension, shown via 6 months of bank statements), or
- ~$73,000–74,000 USD in savings/investments held over the past 12 months
These figures move with the UMA and vary slightly by consulate and exchange rate, so confirm the current number with your nearest Mexican consulate before applying, and aim for 110–115% of the published minimum, since applications that hit the threshold exactly sometimes get rejected on an exchange-rate technicality. The visa is valid for 1 year, renewable up to 4 years total before you’re eligible to apply for permanent residency. Apply at the Mexican consulate in your home region before flying, converting from a tourist FMM to residency status after you’ve already entered is possible but slower and more paperwork-heavy than doing it in advance.
Tax: what’s actually different for Mexico
There’s a tax treaty between the two countries, and citizenship-based taxation still applies. Those two facts shape everything below.
The US-Mexico Income Tax Convention was signed in 1992 and entered into force January 1, 1994, with additional protocols since. Article 24 requires both countries to give credit for tax paid in the other, so there’s a framework for relieving double taxation and resolving disputes between the IRS and Mexico’s Servicio de Administración Tributaria (SAT). But a treaty only reduces double taxation: it doesn’t cancel your US filing obligation. You still file Form 1040 every year, forever, until you renounce.
Practically:
- You file US federal taxes (Form 1040).
- You file FBAR (FinCEN 114) if your foreign accounts exceed US$10,000 in aggregate at any point in the year.
- You file FATCA (Form 8938) if, as a single filer living abroad, your foreign financial assets exceed $200,000 on the last day of the tax year, or $300,000 at any point during the year, whichever you hit first.
- Mexican tax residency isn’t a simple day count. Under Mexico’s Código Fiscal, you become a Mexican tax resident once you have a permanent home in Mexico, unless you also maintain a home elsewhere, in which case a center-of-vital-interests test decides it: you’re resident if more than 50% of your income is Mexican-sourced, or your main professional activity is based in Mexico. (The “183 days” figure that gets repeated everywhere actually governs something else: the point at which a non-resident’s Mexican-performed work becomes taxable in Mexico, not general residency.) Once you’re a Mexican tax resident, you owe Mexican tax on Mexican-source income and, in some cases, worldwide income.
- To avoid being taxed twice on the same income, you use the Foreign Earned Income Exclusion (FEIE, $132,900 for tax year 2026, up from $130,000 in 2025) or the Foreign Tax Credit (Form 1116).
FEIE is straightforward if you pass the Physical Presence Test (330 full days in foreign countries in a 12-month period). The Foreign Tax Credit is usually the better call if you’re paying meaningful Mexican tax already, since it offsets dollar-for-dollar rather than capping at the FEIE ceiling. Getting an accountant who has filed US-Mexico returns before helps, the interaction between the two systems, and the residency test in particular, can be complicated.
How do you handle money across both countries?
You’re earning in USD and spending in MXN. Inside Mexico, that means navigating SPEI, the country’s real-time interbank transfer system (settlement in under 30 seconds, including weekends and holidays), and CLABE numbers, an 18-digit account identifier every Mexican bank account uses for transfers and bill payments. Cash is still more common day to day than in some other Latin American markets, but cards and digital transfers are standard for rent, utilities, and larger purchases.
A US bank account doesn’t touch SPEI. A US-issued card pays your Mexican rent through a slow SWIFT wire or a credit-card FX charge, typically a 3% or higher markup on top of whatever your bank charges.
Local Mexican bank accounts solve this, but they generally require Temporary or Permanent Resident status, a CURP (population registry number, obtainable through RENAPO or a consulate), your passport, proof of Mexican address, and a Mexican phone number. An RFC (tax ID) isn’t always a strict legal precondition at every bank, but most branches ask for one anyway, and some will only accept a generic placeholder RFC before requiring the real one within 90 days. Either way, setup can take a few branch visits.
The faster path is a multi-currency wallet that holds USD natively, converts to MXN at near-spot, and can pay into Mexican accounts without you opening a local one first. That’s what Liminal is built for, and why most Americans who arrive ready don’t rush to open a Mexican bank account in their first few months.
What to set up before you arrive
The Americans who arrive smoothly have these five things done before they fly:
- A Temporary Resident Visa application filed at their home consulate, if they’re staying past 180 days.
- A wallet that holds USD and can pay into Mexican accounts.
- A Mexican SIM or eSIM plan that activates on arrival.
- An accommodation deposit paid in a way the landlord actually accepts, ask before you assume a wire will work.
- A US expat-tax service lined up for the first FEIE/FTC and FBAR filing (Bright!Tax, Greenback, or similar).
The last one is the one Americans most often skip. Don’t. IRS penalties for a missed FBAR alone can hit US$10,000 per account, even if no tax was owed.
Day-to-day differences
Most of the cultural shift is what any American making this move experiences: more relational, more flexible timing, a slower service pace in smaller towns. A few things are specifically jarring coming from the US:
- Cash still matters more than in fully card-first economies, especially for markets, taxis, and smaller restaurants.
- Tipping (propina) is close to US convention, roughly 10–15% at sit-down restaurants, though it’s less universally expected than in the US.
- English is widely spoken in tourist and expat-heavy areas like Playa del Carmen, Puerto Vallarta, and parts of Mexico City, and drops off quickly elsewhere.
- Bureaucracy (trámites) rewards patience. Bring physical copies of everything, banks and government offices are still paper-heavy.
Is Mexico cheaper than the US?
In the cities Americans actually move to, yes, meaningfully, though Mexico City has gotten noticeably pricier in expat-dense neighbourhoods, with Roma and Condesa rents up 20–30% since 2020.
- Mexico City (Roma/Condesa) furnished 1-bed: ~$900–$1,800/month
- Mérida: roughly 20% cheaper than Mexico City
- Oaxaca: roughly 35–40% cheaper than Mexico City
A single expat in Mexico City generally lives comfortably on $1,800–$3,500/month all-in (rent, food, transport, coworking), depending on neighbourhood and lifestyle. Mérida and Oaxaca run well below that for a broadly comparable lifestyle. For a US-salary remote worker, that’s still a real, sustained gap versus most major US cities.
How do you make the move actually work?
The move itself, the flight, the lease, the shipping, is the easy part. The structural setup, visa status, tax plan, and a way to actually move money, is what determines whether your first few months feel like a holiday or an admin slog.
Liminal handles the money side: USD held natively, MXN paid where you need it, transfers that settle in seconds rather than days. You arrive with the financial layer already running.