IHSS caps. RAP takes over. Honduras payroll, solved.
Honduras payroll is not a flat deduction. It demands a two-tier social-security engine – IHSS running two regimes (EM health + IVM pension) on a capped Lempira base, then RAP picking up 1.5% on every Lempira above that ceiling – an annual ISR table computed on salary net of both contributions, the INFOP training levy, twin 13th and 14th month bonuses, and in-country people with direct SAR and IHSS relationships. Most providers deliver two of these. Mercans delivers all of them – on a single proprietary stack with no intermediaries.
native payroll
vs nearest peer
since inception
- Income Tax (ISR)
- Progressive 0%–25%
- Corporate Income Tax
- 25% (+5% solidarity >L 1M)
- IHSS Combined
- 13.5% on capped base
- IHSS Ceiling (Techo)
- L 11,903.13 / month
- Employee IHSS
- 5% (EM 2.5% + IVM 2.5%)
- Employer IHSS
- 8.5% (EM 5% + IVM 3.5%)
- RAP (above ceiling)
- 1.5% EE + 1.5% ER
- ISR Exempt Threshold
- L 22,360.36 / month
- INFOP Training Levy
- 1% employer only
- Minimum Wage (avg)
- L 14,917.20 / month
- 13th & 14th Month
- Aguinaldo + catorceavo
- VAT (ISV)
- 15% standard
- Annual Leave
- 10–20 days by service
- ISR Withholding
- By 10th business day
- Currency
- Lempira (HNL / L)
Payroll compliance: the details that can’t be missed
Honduras regulators enforce quietly but retroactively. The SAR cross-references every monthly ISR withholding declaration against the wages reported to the IHSS and RAP – a mismatch generates an automatic observation. The IHSS audits contributions against the L 11,903.13 ceiling per regime, and RAP expects 1.5% on every Lempira above it. The STSS chases unpaid aguinaldo and catorceavo. None of these failures announce themselves – they accumulate silently until an audit or an employee complaint makes them very visible.
IHSS ceiling and dual-regime split misapplied
IHSS runs two regimes on the same L 11,903.13/month ceiling – EM (health) at employee 2.5% / employer 5% and IVM (pension) at employee 2.5% / employer 3.5%. Systems that use a single blended rate, an outdated ceiling, or forget the split under-remit to one regime and trigger IHSS reassessment plus surcharges.
RAP skipped on salary above the ceiling
The Régimen de Aportaciones Privadas takes 1.5% from the employee and 1.5% from the employer on the portion of salary exceeding the IHSS ceiling – mandatory for employers with 10 or more workers. Omitting RAP under-deducts for every mid-to-senior earner and leaves the employer liable for the missed complementary contributions.
ISR base computed on gross instead of net-of-contributions
Honduran practice deducts employee IHSS and RAP from salary before projecting the annual ISR, then applies the automatic L 40,000/year medical deduction. Computing ISR on raw gross over-withholds every month; ignoring the deductions understates the exempt band and inflates the tax the employee actually owes.
Aguinaldo, catorceavo, and severance mistimed
The 14th month (catorceavo) is due by 30 June and the 13th month (aguinaldo) in December – both are statutory, not discretionary. Termination adds preaviso and cesantía (one month per year, capped). Missing a bonus window or mis-calculating cesantía exposes the employer to STSS sanctions and labour-court claims.
The three types of providers who struggle with Honduras
Global Aggregator Platforms
Platforms like Deel, Remote, and Rippling operate through a partner network in Honduras – they don’t own the entity, don’t directly manage SAR, IHSS, and RAP registration, and don’t control the compliance relationship. When the IHSS revises its ceiling or the SAR indexes the ISR table, the instruction travels: platform → partner → your payroll. Each handoff introduces delay and interpretation risk.
- ×No direct SAR / IHSS / RAP filing – third-party intermediary handles it
- ×IHSS dual-regime split and ceiling often blended or hardcoded
- ×RAP above-ceiling logic and INFOP levy tracked manually
- ×Regulatory updates filtered through partner SLAs, not live
Large Global Payroll Incumbents
ADP, Ceridian, and similar incumbents have Honduras coverage – in name. In practice, their Central America coverage is often delivered through regional partners or legacy systems that weren’t built for the IHSS EM/IVM split, the RAP hand-off above the ceiling, or the inflation-indexed ISR table that the SAR republishes each year.
- ×IHSS ceiling recalculation hardcoded – not indexed dynamically
- ×RAP and INFOP handled off-system in spreadsheets
- ×13th and 14th month accruals not modelled per statute
- ×Long implementation timelines – Honduras not a core market
Local Honduran Firms
Local Honduran accounting and bookkeeping firms know the market – but they can’t scale with you. No payroll technology platform, no HRIS integration, no multi-country consolidation, and no data-security certifications that multinationals require. Fine for 15 employees in Tegucigalpa. Inadequate at 150 across the region.
- ×No proprietary payroll technology – manual spreadsheet-based processing
- ×No HCM connector – Workday, SAP, Oracle feeds require custom work
- ×No data-security certifications (SOC 1/2, ISO 27701, BCR)
- ×No LATAM consolidation – cannot report across Honduras + other entities
The only provider that closes every gap
Mercans is the only Honduras payroll provider that combines a proprietary payroll technology stack, full-time in-country compliance teams, direct SAR, IHSS, and RAP relationships, and enterprise-grade data security – simultaneously, on one contract, with no intermediaries.
The only engine built for Honduras’s actual payroll architecture
G2N Nova™ is the world’s only API-first gross-to-net payroll engine. It natively models the IHSS as two capped regimes – EM health and IVM pension – on the L 11,903.13 ceiling, hands the excess to RAP at 1.5% per side, computes the annual ISR table on salary net of both contributions after the L 40,000 medical deduction, applies the INFOP levy, and accrues the 13th and 14th month automatically. This isn’t configuration. It’s engineering.
Full-time Honduras team – not a partner you phone when things break
Mercans employs full-time payroll and compliance professionals in Honduras. They maintain active relationships with the Servicio de Administración de Rentas, the Instituto Hondureño de Seguridad Social, and the Régimen de Aportaciones Privadas – not through a contact directory, but through ongoing regulatory engagement. When the IHSS revises the ceiling, when the SAR reindexes the ISR table, when the STSS issues a new labour ruling – we know before it reaches your inbox.
The security posture multinationals require – even where Honduras law is still catching up
Honduras has no comprehensive data-protection statute in force – personal data is protected only by the constitutional habeas data guarantee (Article 182), while a GDPR-inspired draft Personal Data Protection Law remains stalled in Congress. Mercans holds BCR approval, ISO 27701 certification, SOC 1 & 2 certifications, and ISO 27017/27018 – the enterprise privacy framework multinationals require, regardless of the local baseline. Zero security breaches since inception.
Where Mercans wins on every Honduras-specific capability
Each row is a Honduras-specific capability. Each cell shows native coverage as a fill bar – full = native in-platform, half = partial / manual workaround, empty = gap.
Honduras Capability Coverage · 8 dimensions
L 11,903.13 ceiling per regime
1.5% each side over the cap
less IHSS + RAP + L 40k
aguinaldo + catorceavo
Every rate. Every cap. Every obligation.
Honduras payroll operates on exact numbers with hard monthly deadlines. Mercans builds every figure below into G2N Nova™ and monitors them proactively – so you’re never discovering a rate change from a penalty notice.
Honduras · Rate & Compliance Dashboard
Live 2025–26IHSS Runs Two Capped Regimes, RAP Takes the Rest
EM (health) and IVM (pension) each sit on the L 11,903.13/month ceiling – employee 5% and employer 8.5% combined on the capped base. Above the ceiling, RAP applies 1.5% per side. The ceiling is revised periodically, so both the cap and the RAP hand-off must move together. G2N Nova™ tracks both dynamically – not as hardcoded values.
→ Dynamic IHSS ceiling + RAP hand-off in G2N Nova™ISR Is Computed on a Net-of-Contributions Base
Employee IHSS and RAP are deducted from salary before the annual ISR table is applied, together with the automatic L 40,000/year medical deduction. The table (0/15/20/25%) is re-indexed each year for inflation. A domiciled individual with gross income of L 10M or more is also tested against a 1.5% alternative minimum on gross.
→ Net-of-contributions ISR base with annual re-indexingTwo Statutory Bonuses and an Employer Training Levy
The 13th month (aguinaldo, December) and 14th month (catorceavo, due by 30 June) are legal entitlements, each about one month’s salary pro-rated by service. Employers also pay a 1% INFOP training levy on payroll. All three are standing costs that sit outside the IHSS and RAP contributions.
→ Aguinaldo, catorceavo, and INFOP accrued automaticallyTermination Adds Preaviso and Cesantía
Dismissal without just cause triggers preaviso (advance notice by length of service) and cesantía (one month’s salary per year of service, capped at 25 months), plus accrued vacation and pro-rated 13th/14th month. The SAR also cross-matches final payroll against IHSS and RAP filings, so the settlement wage base must reconcile.
→ Preaviso + cesantía settlement engine in G2N Nova™Run a Honduras payroll. Right here, right now.
Switch worker type. Move the slider. Every number you see is the same calculation G2N Nova™ runs in production – IHSS on two capped regimes, RAP above the ceiling, the annual ISR table on a net-of-contributions base, and true cost of employment exposed live.
Honduras Social Contribution Calculator · Live
G2N Nova™ engineEight things only Honduras experts know to handle
These are the compliance details that don’t appear in standard payroll setup guides – but appear in every IHSS audit, SAR cross-match, and STSS labour inspection we’ve encountered in Honduras.
IHSS Is Two Regimes on One Ceiling – EM and IVM
IHSS contributions split across EM (Enfermedad y Maternidad / health) at employee 2.5% + employer 5%, and IVM (Invalidez, Vejez y Muerte / pension) at employee 2.5% + employer 3.5%, with the State adding 0.5% each. Both sit on the same L 11,903.13/month ceiling, so employee tops out at 5% and employer at 8.5% of the capped base.
RAP Picks Up Where the IHSS Ceiling Stops
The Régimen de Aportaciones Privadas is the mandatory complementary pillar: 1.5% from the employee and 1.5% from the employer on the portion of salary that exceeds the IHSS ceiling of L 11,903.13. It is compulsory for employers with 10 or more workers and is the deduction most often missed for mid-to-senior salaries.
ISR Runs on Salary Net of IHSS and RAP
Honduran payroll deducts employee IHSS and RAP from salary before projecting the annual ISR, then subtracts the automatic L 40,000/year medical deduction (Article 22 of the ISR Law). Computing tax on raw gross over-withholds; the SAR expects the net-of-contributions base annualised across the year.
The ISR Table Is Re-Indexed for Inflation Every Year
The annual ISR table (0% to L 228,324.32, then 15/20/25%) is adjusted each year by the SAR for the prior-year inflation rate – 4.98% for 2026, lifting the exempt band to L 22,360.36/month. Hardcoding last year’s thresholds under-withholds at the bottom and over-withholds at the top.
Two Statutory Bonuses: Aguinaldo and Catorceavo
Honduras mandates a 13th month (aguinaldo, paid in December) and a 14th month (catorceavo, due by 30 June) – each roughly one month’s salary, pro-rated by time worked. They are legal entitlements under the Labour Code and Decree 135-94, not discretionary bonuses, and carry their own tax treatment.
INFOP Is a 1% Employer Training Levy
Employers contribute 1% of payroll to the Instituto Nacional de Formación Profesional (INFOP) – an employer-only levy with no employee deduction. It sits alongside IHSS and RAP as a standing monthly cost and is easy to omit from true-cost-of-employment models built for other markets.
Termination Means Preaviso Plus Cesantía
Dismissal without just cause triggers preaviso (advance notice scaling with service) and cesantía (severance of one month’s salary per year of service, capped at 25 months). Accrued vacation and pro-rated 13th/14th month are settled on exit. Mis-calculating cesantía is a common labour-court trigger.
The SAR Cross-Matches Payroll to IHSS and RAP
Employers withhold ISR monthly and remit within 10 business days of the following month; there is no employee return. The SAR reconciles the wages on the ISR declaration against those reported to IHSS and RAP – any divergence generates an automatic observation and a request for explanation.
One workforce. Two entirely different compliance tracks.
Honduran nationals on full IHSS and RAP coverage vs. foreign and expatriate workers on residency-dependent tax treatment requires two distinct compliance frameworks, two ISR approaches, and two different settlement paths. Mercans runs both simultaneously on every pay cycle.
Parallel Compliance Engines
IHSS from Day 1 on two capped regimes. EM (health) 2.5% employee / 5% employer and IVM (pension) 2.5% employee / 3.5% employer, both on the L 11,903.13/month ceiling. The State adds 0.5% to each regime. Employee tops out at 5% and employer at 8.5% of the capped base.
RAP applies to salary above the ceiling. The Régimen de Aportaciones Privadas takes 1.5% from the employee and 1.5% from the employer on every Lempira above the IHSS ceiling – mandatory for employers with 10 or more workers.
ISR withheld monthly on a net-of-contributions base. Salary less employee IHSS and RAP, annualised, less the L 40,000 medical deduction, run through the 0/15/20/25% table and divided by 12. Remitted to the SAR within 10 business days of the following month.
Aguinaldo, catorceavo, and full termination rights. The 13th month in December and the 14th by 30 June, plus 10–20 days annual leave by service, and preaviso + cesantía (one month per year, capped at 25) on dismissal without cause.
Residency drives the ISR treatment. A domiciled expat (broadly, resident in Honduras) is taxed on the same progressive 0–25% table as nationals. A non-domiciled non-resident faces a flat 25% final withholding on Honduran-source income, with no brackets and no personal deductions.
IHSS and RAP still apply on local payroll. Foreign employees engaged on a Honduran payroll fall within IHSS and RAP scope on the same capped and above-ceiling bases as nationals, unless covered by a documented home-country or totalization arrangement.
A valid work permit gates the payroll. Foreign workers need a residence and work permit before payroll can run legally, and the general rule limits foreign staff to a defined share of the workforce and payroll. Running payroll without a valid permit exposes the employer to penalties.
Benefit structuring affects the taxable base. Housing, schooling, and similar expatriate benefits are taxable by how they are defined in the contract. Mercans confirms each expat’s residency and enrolment position before the first run rather than assuming it.
Every obligation. Every authority. Mercans owns the calendar.
Honduras compliance runs across the SAR, the IHSS, the RAP, INFOP, and the STSS on monthly, annual, and event-triggered cadences. Mercans’ managed payroll absorbs every filing as standard scope – you don’t track deadlines. We do.
ISR Withholding Return
Per-employee ISR withheld on the progressive 0/15/20/25% table over a net-of-contributions base, filed and remitted to the SAR within 10 business days of the following month. The SAR cross-matches the wage base against IHSS and RAP filings.
IHSS Contribution Filing (EM + IVM)
Employee 5% and employer 8.5% on the L 11,903.13/month ceiling, split across the EM (health) and IVM (pension) regimes, with the State adding 0.5% to each. Remitted monthly to the Instituto Hondureño de Seguridad Social.
RAP Contribution Filing
The Régimen de Aportaciones Privadas takes 1.5% from the employee and 1.5% from the employer on salary above the IHSS ceiling – mandatory for employers with 10 or more workers – remitted monthly to the administering fund.
INFOP Training Levy
Employers remit 1% of payroll to the Instituto Nacional de Formación Profesional – an employer-only levy with no employee deduction, paid monthly alongside IHSS and RAP.
Décimo Cuarto Mes (Catorceavo)
The 14th-month bonus – roughly one month’s salary pro-rated by service – is due by 30 June under Decree 135-94, covering the period from 1 June of the prior year. Non-payment exposes the employer to STSS sanctions and worker complaints.
Décimo Tercer Mes (Aguinaldo)
The 13th-month bonus – about one month’s salary pro-rated by service – is paid in December, covering the period to 30 November. It is a legal entitlement under the Labour Code, not a discretionary bonus.
Annual Income Tax Return (DJ)
The annual Declaración Jurada del ISR for companies and self-employed is due by 30 April. Salaried employees do not file separately – the employer’s monthly withholding is reconciled – but corporate returns must align with declared payroll.
Preaviso & Cesantía Settlement
Dismissal without just cause triggers preaviso (advance notice by service) and cesantía (one month’s salary per year, capped at 25 months), plus accrued vacation and pro-rated 13th/14th month, settled under the Labour Code.
Honduras is one market. Mercans covers all of Central America.
For companies running payroll across multiple Central American markets, complexity multiplies – not adds. Each country runs its own tax authority, social-security institute, and filing mandate. Mercans covers all major markets on a single platform with country-specific compliance engines running in parallel.
covered
1 contract
consolidation
Central America
Every filing. Every format. Submission-ready.
Mercans generates the exact file types that the SAR, the IHSS, the RAP, and INFOP expect to receive – not formatted summaries that need reformatting before you can submit them.
