On Wednesday, October 14, the tax reform package put forward by Mexico's Chamber of Deputies cleared that body by vote and moved to the Senate, with a January 1, 2027 start date set for when the measures would take effect. By a tally of 322 in favour to 115 against, the bill cleared its final vote.
Embedded within a wider 2027 fiscal package — one that also encompasses the federal revenue law and the national budget — are amendments to sections of Mexico's income tax statute, referred to domestically by the Spanish-language abbreviation ISR. Lawmakers from the ruling Morena bloc, joined by allied representatives from the Labour and Green parties, cast their votes in support of the measure. Votes from PAN, PRI, and Citizens' Movement landed on the opposing side of the measure, a television news outlet reported.
Approval of the legislation by the lower house came through a general vote on Tuesday evening, as one television network reported. By the time Wednesday's clause-by-clause voting concluded, not one of the more than 200 amendments tabled by opposition members had passed, based on broadcast reporting of the proceedings.
Under the restructured rules, businesses whose yearly revenues clear 50 million pesos — roughly US$2.7 million — and that also record a taxable profit would fall within the scope of the new regulatory framework established by the reform. When the total write-offs surpass 96.67% of that earnings figure, the allowable deduction is capped at that threshold. Firms falling beneath that threshold would still see one percentage point trimmed from their available deductions under the proposed legislation.
Blocked deductions do not disappear — they roll into a carryforward pool that taxpayers can draw on across the following two decades. According to officials, the restriction is designed to address deductions tied to invoices that lack legitimacy and originate from entities set up solely on paper. Those vendors accounted for roughly 10% of procurement expenditure at companies above the threshold, compared with around 1% at the majority of those below it.
Beginning in 2027, any business whose most recent tax return showed deductions exceeding 96.67 percent of total income would be required to increase the amount it remits each month as an advance tax instalment. Under the legislation, the profit-rate multiplier applied when calculating those payments would reach roughly 2.6 times the baseline figure — compared with around 1.07 for other large companies.
Under the reform, the share of a company's adjusted taxable profit that qualifies as deductible net interest would drop from 30% to 20%. According to official statements, the rate falls within the 10% to 30% band that the OECD has recommended.
Under the new chapter's provisions, qualifying large firms would be permitted to offset no more than half of any given year's taxable income through accumulated prior losses, with whatever deficit remains eligible for carry-forward across the subsequent two decades. For maquiladoras — the assembly operations clustered along the border that produce goods bound mainly for the US market — tariff obligations on those products only attach when they enter domestic circulation inside Mexico.
Three categories of organisations fall outside the scheme's scope: those trading for fewer than five years, agricultural enterprises, and any business currently subject to insolvency proceedings.
PRI deputy Emilio Suárez, who sits in opposition, argued that the caps on interest and losses would place an undue burden on smaller and mid-sized businesses. A single television network picked up the address he gave from the chamber floor that Tuesday.
Under the overhaul, affiliated companies lose access to a voluntary arrangement that previously allowed them to postpone a portion of their corporate tax obligations. Any organisation that has not yet transitioned away from the system would be required to have done so by 1 January 2027.
Under the reform, taxpayers filing as individuals would see the earnings threshold for the simplified RESICO tax regime adjusted upward. Under the revised threshold, a person's annual earnings could reach 5 million pesos — roughly US$271,000 — and still qualify for the programme, a ceiling raised from the previous 3.5 million pesos, or approximately US$190,000. Currency figures throughout are converted at a rate of approximately 18.46 pesos per US dollar, reflecting the exchange rate recorded on 15 October 2026.
Two further steps stand between the legislation and the statute book: a Senate vote in favour, followed by presidential publication, with the resulting law set to come into force on 1 January 2027. The legislation retains the option of amendment in the upper chamber before returning to the lower house for further consideration. SAT, the country's tax authority, retains the power to put forward guidance that would alter how businesses interpret and apply the updated thresholds.
