Mexico outlines tax‑free income options and tackles persistent cash payments

In Mexico, the Income Tax Law identifies several categories of income that are exempt from personal income tax. Key exemptions include inheritances and legacies, direct family donations, the sale of a primary residence up to a specified value, work‑risk indemnities, and pensions or retirement benefits within a set daily limit. Each exemption has specific documentation and reporting requirements.

Despite a highly developed electronic payments infrastructure, eight out of ten everyday transactions in Mexico are still carried out in cash. The interbank payment system (SPEI) processed over 5,400 billion operations in 2024, valued at more than 579 trillion pesos. Reliance on cash hampers formalisation, limits credit access, raises transaction costs for businesses and the government, and contributes to lower productivity and security concerns.

Both issues highlight the tension between legal mechanisms that can reduce tax burdens and the broader challenges of moving the Mexican economy toward greater digital inclusion and formalisation.