MEXICO · TAX
Key Facts
- Power Index Mexico ranks 2nd of 14 in The Rio Times Latin America Power Index, with 71.4 points (October 2026 edition).
- What is happening Mexico’s lower house voted 349 to 92 on Tuesday, 3 November, to finish a 2027 income tax law.
- Why it matters Large firms face deduction caps from 1 January 2027; automakers and gas stations are exempt.
- The numbers Firms with income above 50 million pesos (US$2.7 million) face caps; interest write-offs drop from 30% to 20%.
- Who is who President Claudia Sheinbaum’s Morena party and its allies hold the majority in both chambers of Mexico’s Congress.
- What to watch Publication in the Diario Oficial de la Federación, Mexico’s official gazette, which has no date yet.
- What it means for you Mexican units of US firms above the income line face tighter deductions from 2027, unless exempt.
Mexico’s lower house gave final approval on Tuesday, 3 November, to a 2027 income tax law limiting deductions for big companies. The vote sends the law to the president for publication.
Mexico’s lower house, the Chamber of Deputies, voted 349 to 92 on Tuesday, 3 November, to finish the 2027 income tax law. The law now goes to the president for publication, and it is set to apply from 1 January 2027.
For US companies with Mexican subsidiaries, the law caps deductions and tax-loss write-offs once income passes 50 million pesos (about US$2.7 million). Mexico is a major US trading partner, so tax changes there reach many American supply chains.
- ISR: Mexico’s income tax on companies and individuals.
- Chamber of Deputies and Senate: the two houses of Mexico’s Congress.
- Morena: President Claudia Sheinbaum’s governing party, with smaller allies.
- PAN, PRI and MC: three opposition parties, the National Action Party (conservative), the Institutional Revolutionary Party and Citizens’ Movement.
- Diario Oficial de la Federación: the official gazette where Mexican laws are published before they apply.
What Deputies Approved on Tuesday
The vote was 349 in favour and 92 against, with no abstentions, on both the general text and the individual articles. The Senate’s changes were accepted as sent.
Deputies rejected opposition proposals to widen the exemption. The text they approved is the one the Senate changed on Tuesday, 27 October.
The Senate Change for Automakers and Gas Stations
The Senate rewrote Article 78-E so that vehicle makers and fuel retailers escape the new cap on deductions and tax losses. The exemption covers assembly and manufacturing under Mexico’s fiscal warehouse customs regime, and gas and diesel sellers that hold a permit.
Income from selling vehicles inside Mexico is not exempt under the Senate text. More than 13,000 gas stations are covered.
Opposition deputies from the PAN, PRI and MC called the exemption too narrow. They said it leaves out other sectors, including auto-parts makers, freight firms and gas distributors.
How the Wider Law Works
It limits deductions and past tax-loss use for Mexican companies earning over 50 million pesos with a taxable profit. The cap does not apply to the two groups the Senate exempted.
It also cuts the deductible share of net interest to 20% of adjusted taxable income, down from 30%. The US Chamber of Commerce, an American business lobby, says the package would also cap tax-loss use at half of taxable income.
What It Means for US Readers
Mexican units of US firms above the income line face tighter deductions from 2027, unless they assemble vehicles or sell fuel. The US Chamber of Commerce said in a letter on 3 November that the package could cut investment and jobs.
Conversions use the Bank of Mexico’s official FIX rate of 18.76 pesos per US dollar, set on 3 November 2026. INEGI, the national statistics institute, estimates third-quarter growth of 0.9% on the second quarter and 3.2% on a year earlier.
Earlier coverage is in Mexico Tax Reform on Big Firms Clears House and Mexico Revenue Law Passes Senate. More is in the Mexico economy guide, the Mexico-US relations guide and the Mexico hub.
What Is Not Known
The date of publication in the official gazette is not announced. Nor is the final decree text, so the exact wording of the exemptions can still be checked only against that publication.
No official count says how many US-owned companies fall above the 50 million peso line. The extra revenue the changes will raise is also not confirmed in the records checked.
What Comes Next
After publication the law applies from 1 January 2027, so companies have about two months to plan. Congress has no further vote on this text.
The vote does not remove the cap for most companies above the income line. It also does not settle the US Chamber’s request for more consultation with business.
Frequently Asked Questions
What did Mexico’s lower house approve on 3 November?
Deputies voted 349 to 92 to accept the Senate’s changes to the 2027 income tax law. That finished the law’s passage through Congress.
Who is exempt from the new deduction cap?
The Senate exempted vehicle assembly and manufacturing under the fiscal warehouse regime, and permit-holding gas and diesel retailers. Other large companies remain covered.
When does the income tax law take effect?
It is set to apply from 1 January 2027 once the president publishes it in the official gazette. No publication date has been announced.
Does the law affect US companies?
Mexican subsidiaries of US firms with income above 50 million pesos (about US$2.7 million) face the caps. The US Chamber of Commerce has urged changes.
Sources: Cámara de Diputados, Gaceta Parlamentaria (plenary record, 13 to 14 October and 3 November 2026); Senado de la República (plenary session of 27 October 2026); U.S. Chamber of Commerce, letter regarding Mexico’s 2027 income tax reform proposals, 3 November 2026; INEGI, preliminary GDP estimate for the third quarter of 2026 (accessed 4 November 2026).
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief