Mexico Plans Tax Hikes on Tobacco, Sugary Drinks, and Games

Mexico’s Finance Ministry (SHCP) has submitted the 2026 Economic Package to the Chamber of Deputies, outlining higher taxes on tobacco, sugary beverages, video games, and gambling in an effort to increase federal revenue and adapt fiscal policy to current health and consumption trends.

Finance Minister Edgar Amador Zamora presented the plan in San Lázaro, highlighting its goals of strengthening tax collection, expanding social spending, and modernizing the fiscal framework under President Claudia Sheinbaum’s administration.

The proposal would raise the IEPS tax on tobacco from 160% to 200% of the product price, with additional per-cigarette quotas and VAT. Taxes on hand-rolled cigars would rise from 30.4% to 32%, while new levies would be imposed on nicotine pouches and electronic devices, tied to nicotine content. Producers would also need to provide detailed product information to the SAT.

The IEPS on sugary drinks would nearly double, from MX$1.6451 (US$0.088) to MX$3.0818 per liter, covering sodas, syrups, powders, and light versions. Artificial and natural sweeteners would be included in the taxable base. According to SHCP, funds raised will be channeled into public health programs.

For the first time, violent and adult video games would face an 8% IEPS, applying to physical and digital sales, subscriptions, and in-game purchases. Platforms would have to register with SAT and issue compliant invoices. Non-registered providers could be blocked.

Taxes on betting and gambling would rise from 30% to 50%, affecting both land-based and online operators. Officials said the measure aligns with international standards and addresses social risks tied to gaming.

The package projects federal revenues above MX$8.7 trillion, with tax income near MX$5.8 trillion. The 2026 fiscal deficit is estimated at 4.1% of GDP, with public debt at 52.3%. The lower house must approve the income law by Oct. 20, with Senate review due by Oct. 31 and the final budget set by Nov. 15.

“The 2026 Economic Package charts a path toward a fairer and more competitive Mexico,” Amador Zamora said, stressing the government’s willingness to collaborate with legislators.