Mexico is discussing a constitutional reform that would exempt low-income workers from paying the Income Tax, known as ISR [1].
This proposal represents a significant shift in fiscal policy aimed at directly increasing the take-home pay of the country's poorest earners. By removing monthly tax retentions, the government seeks to shield the net salaries of the working class from erosion and improve their overall purchasing power [1, 2].
The reform would target workers who earn modest salaries, specifically those whose income falls within a certain multiple of the minimum wage [1, 2]. Under the current system, these retentions are deducted monthly, reducing the actual amount of money available to households for basic needs, and services.
Officials are debating the modification of the ISR base to ensure that the most vulnerable economic sectors are the primary beneficiaries [1]. The measure is designed to provide a financial cushion for those earning the lowest wages in the formal economy, a move that could alter the distribution of the national tax burden.
Legislators are currently reviewing the proposal for a possible implementation in 2026 [2]. While the goal is to support the working class, the debate continues regarding how the loss of this tax revenue will affect public funding and government spending [2].
If passed, the reform would mark a departure from traditional tax collection methods by prioritizing immediate salary protection over broad-base revenue generation. The focus remains on the ability of low-wage earners to maintain a decent standard of living in the face of economic pressures [1].
“The reform would target workers who earn modest salaries.”
This proposal signals a pivot toward a more progressive tax structure in Mexico, prioritizing immediate social relief over fiscal consolidation. By exempting low-income earners from the ISR, the government is attempting to stimulate domestic consumption by increasing the disposable income of the largest segment of the workforce. However, the success of the measure depends on whether the government can offset the resulting decrease in tax revenue without cutting essential public services.
