On 8 September 2026 the Mexican government sent its 2027 budget package, the Paquete Económico, to Congress. For self-employed people, freelancers and landlords who are tax resident in Mexico, it contains news that directly affects many of them: the Régimen Simplificado de Confianza, RESICO for short, is to be opened up to considerably more people, and a new flat-rate VAT option is to be added. None of it has been passed yet. But the government documents already show precisely what is proposed, what applies today and who would benefit.
What the government is proposing
The key points are set out in the finance ministry's (SHCP) Criterios Generales de Política Económica 2027, in the section on tax policy measures. Under the heading of simplification for micro and small businesses, the paper lists the following for RESICO:
For scale: at the ECB reference rate of 10 September 2026 (MXN 19.68 per euro), today's cap of MXN 3.5 million is roughly EUR 178,000. The proposed cap of MXN 5 million is roughly EUR 254,000.
The higher cap itself is part of a separate bill amending the income tax law (LISR), which is part of the package. The VAT option, by contrast, sits directly in the draft 2027 revenue law (Iniciativa de Ley de Ingresos de la Federación), in Article 25, section XVIII. The full text of this draft is available and sets out the details of the new option.
Where the legislative process stands
Under Article 42 of the federal budget law LFPRH, the government has to submit the package by 8 September, and it did. The same law sets the deadlines for Congress: the revenue law must be passed by the Chamber of Deputies by 20 October and by the Senate by 31 October. As of 10 September, the package is under discussion in the Chamber of Deputies, which decides first on revenue and taxes.
In practice, every figure mentioned here is a proposal. Congress can adopt, amend or drop it. The changes would only take effect on publication in the official gazette (DOF), planned for 1 January 2027. Until then, current law applies unchanged.
Why the government is expanding RESICO
The reasoning is in the same chapter of the Criterios Generales. The finance ministry notes there that only one company in ten pays a tax equivalent to what an individual pays under RESICO. Of 524,000 companies that declared positive income for 2025, 60.7% paid no income tax at all, most of them because their deductions equalled or exceeded their income. The package answers this in two parts. For large companies, deductions are to be capped, loss carry-forwards limited to half of profit, and the interest deduction cut from 30% to 20% of adjusted profit. For small businesses and the self-employed, the simple income-based system is to be widened instead. The paper uses RESICO as its benchmark: low rates, no deductions in return, and complete electronic invoicing.
How RESICO works today
The rules for individuals are in Article 113-E LISR. RESICO is open to people whose income comes exclusively from business activity, professional services or renting out property, such as consulting, a trade, online retail or letting an apartment. The condition is that this income did not exceed MXN 3.5 million in the previous year. If you are just starting, you estimate your first year.
What sets it apart is the tax base. Tax is charged on the income actually received as shown on the electronic invoice (CFDI), excluding VAT and without any deduction for costs. The rate depends on the level of monthly income:
| Monthly income up to (MXN) | Tax rate |
|---|---|
| 25,000 | 1.00% |
| 50,000 | 1.10% |
| 83,333.33 | 1.50% |
| 208,333.33 | 2.00% |
| 3,500,000 | 2.50% |
The monthly payment is due by the 17th of the following month, plus an annual return. If you also receive salary or interest, you may stay in the regime as long as the total of this income does not exceed the cap.
The exclusions matter just as much. According to the wording of the law, RESICO cannot be used by:
For people moving to Mexico, the first point is the trickiest. If you keep your company back home, whatever the country, you fall under the exclusion according to the wording, because the law does not distinguish by where the company is registered. Whether an administrative rule helps in an individual case is something you should have checked before you register. The third point affects anyone who receives income through a structure in a low-tax country.
If you exceed the cap during the year, you move into the regular regime, with cost deductions and the progressive scale, from the following month. Under Article 113-E, the authority can also reclassify you on its own initiative.
What the higher cap would mean in practice
Today's cap of MXN 3.5 million is roughly EUR 14,800 of income a month. For self-employed people billing clients in Europe or North America at their home rates, that is reached quickly. At MXN 5 million, the band in which the top rate of 2.5% on income applies would widen by about MXN 1.5 million.
Because RESICO ignores costs, it pays off above all for people with low cost ratios: freelancers, programmers, translators, landlords without heavy financing. If you have large purchases of goods or high staff costs, you may pay less on profit in the regular regime, even though the scale there is higher. The new cap does not change that calculation; it just makes it relevant to more people.
The proposal is just as notable for companies. Today certain small personas morales have to be in RESICO; in future they are to be allowed to choose. For people who set up their own company in Mexico, this opens real room for planning. How company formation in the region works in principle is covered in the overview of company formation in Latin America.
The new option: 7% VAT on consideration received
VAT (IVA) in Mexico is normally 16%, and businesses deduct the input VAT charged to them. Under Article 25, section XVIII of the draft, RESICO taxpayers, individuals and companies alike, are to be able to choose instead: they continue to charge their customers the normal rate, but pay the tax authority only 7% of the taxable consideration actually received. There is then no input VAT deduction. The monthly payments are final.
The draft attaches a number of conditions:
A simple calculation shows who benefits. If you invoice MXN 100,000 plus MXN 16,000 VAT, today you pay over MXN 16,000 minus your input VAT. With the option it would be a flat MXN 7,000. So the option pays off as long as your deductible input VAT is below MXN 9,000, which at 16% means as long as your taxable purchases stay below roughly MXN 56,000. Service providers with few materials are almost always below that, traders with large purchases of goods almost never.
Two further points in the draft affect small businesses. The exemption threshold for income from agriculture, livestock, forestry and fishing is to rise from MXN 900,000 to MXN 1 million. And the withholding that online platforms apply to individuals' sales is to be aligned at 2.5%, the top RESICO rate. If you let an apartment through a booking platform, keep an eye on this change.
Who this matters for if you are moving to Mexico
RESICO is a regime for people who are tax resident in Mexico. A residence permit alone does not make you resident, and conversely, you can become resident without meaning to. What counts is your home and, if you also have one elsewhere, the centre of your vital interests. How this line is drawn in detail, and which residence permits exist, is explained in the article on Mexico residency.
If you are deliberately moving to Mexico and working there as a self-employed person, use the reform as a reason to review your planning. If your income is between MXN 3.5 and 5 million, you would fit into RESICO for the first time from 2027. If it is below that, the VAT option could lower your burden further, provided input VAT hardly plays a role for you.
Your home country is part of the picture too. If you keep a home in your country of origin, the tax treaty between that country and Mexico, where one exists, decides which state treats you as resident. A low Mexican rate only helps you if your residence really is in Mexico and your departure from home has been completed properly. Where your home country stands:
What to watch until the end of the year
The Chamber of Deputies has to decide by 20 October, the Senate by 31 October. In the committee reports, watch three points: whether the MXN 5 million cap stays, whether the VAT option passes unchanged, and whether the exclusions in Article 113-E are touched. Only publication in the DOF settles what applies from January 2027. Until then, plan on the basis of current law and treat the new cap as a possibility, not a fact. The Mexico country profile sums up the tax logic, treaty protection and naturalisation.
Carpe Diem. Life is short and fleeting. One shot. Make it count.