Mexico Plan Mexico Innovation Tax Deduction 2026

Program Overview

On January 21, 2025, the Mexican government enacted an executive order introducing new tax incentives as part of the 'Plan Mexico' initiative. The program's goal is to position Mexico among the top 10 global economies by promoting new investments, nearshoring, local training, and innovation.

Innovation Tax Deduction

Additional Deduction: 25% of the increase in innovation expenses

Program Period: 2025-2030 (five-year incentive period)

Total Budget: $30 billion Mexican pesos (~$1.5 billion USD) authorized

Innovation Budget Allocation: $73 million USD specifically for innovation deductions

Incremental Calculation: Based on positive difference vs. 3-year average

Qualifying Innovation Expenses

Patent Development: Investment projects for invention development leading to patents

Initial Certifications: Investment projects to obtain certifications required for integration into local/regional supply chains

Supply Chain Integration: Expenses supporting nearshoring and local manufacturing

Technology Development: Innovation investments for competitive advantage

Process Innovation: Improvements to production methods and efficiency

How the Deduction Works

Step 1: Calculate current year innovation expenses

Step 2: Determine average innovation expenses for previous 3 tax years

Step 3: Calculate positive difference (increase) between current year and 3-year average

Step 4: Apply 25% additional deduction on the increase amount

Step 5: Claim deduction in annual corporate tax return

Example: If innovation expenses increased from $400K (3-year avg) to $600K (current year), the increase is $200K. Additional deduction = 25% x $200K = $50K.

Eligibility Requirements

Mexican taxpayer (registered company in Mexico)

Innovation expenses properly documented and categorized

Expenses must qualify as patent development or certification investments

Compliance with Mexican tax obligations

Expenses must show increase vs. 3-year historical average

Subject to Evaluation Committee oversight and approval

Application and Oversight

Evaluation Committee: Established to oversee application of tax incentives

Budget Cap: $30 billion pesos total across all Plan Mexico incentives

Documentation: Maintain detailed records of innovation expenses

Verification: Subject to tax authority review and audit

Incentive Period: Claims available 2025-2030

Annual Claims: Deduction calculated and claimed annually based on year-over-year increase

Plan Mexico Strategic Objectives

Position Mexico among top 10 global economies

Promote nearshoring and foreign investment attraction

Support local supply chain development

Foster innovation and technological advancement

Encourage dual training programs

Integrate Mexican companies into global value chains

Capitalize on US-Mexico trade relationship and USMCA

Key Advantages

Automatic deduction (claim in tax returns)

Multi-year program provides stability (2025-2030)

Rewards innovation growth and expansion

Supports nearshoring and supply chain integration

No cap on individual company deductions (subject to overall budget)

Aligns with Mexico's strategic economic positioning

Encourages patent development and IP creation

Can be stacked with other Mexican innovation programs

Contact Information

Mexican Tax Authority (SAT - Servicio de Administración Tributaria) Website: https://www.sat.gob.mx

Ministry of Economy (Secretaría de Economía) Plan Mexico Information

Consult with Mexican tax advisors for compliance guidance and application support