Mexico Supreme Court rejects proposal to tax inherited Afore funds

The plenary of Mexico's Supreme Court of Justice (SCJN) debated whether withdrawals from individual retirement accounts (Afores) paid to beneficiaries of deceased workers should be subject to the Income Tax (ISR). Minister Lenia Batres Guadarrama argued that these funds, like inheritances and legacies, should be taxed, stating, “Yo creo que lo injusto es que no se graven las herencias y el legado.” The majority of the nine‑member court rejected the proposal, maintaining that the amounts are part of the worker’s accrued pension assets and should remain exempt. The project was withdrawn for further drafting, leaving no definitive fiscal rule on Afore inheritances for now.

The discussion arose from Contradicción de Criterios 49/2026, which highlighted conflicting lower‑court rulings on the tax treatment of such transfers. While the proposal sought to align Afore payouts with existing inheritance tax policies in many OECD countries, the court emphasized the social protection purpose of the retirement system. As a result, the status quo persists, and beneficiaries will continue to receive Afore funds without ISR liability pending a new proposal.