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Mexico's public finances through August: VAT up, income tax down, and fuel subsidies cut IEPS revenue

The deficit came in 276 billion pesos below plan. The broadest measure of public debt reached 51.5% of GDP.

By Miguel Díaz Miró · Responsible editor ·
Facade of Mexico's Finance Ministry building

Mexico's Finance Ministry (SHCP) released its public finance report for January through August 2026 on September 30. Over those eight months, the government collected much more in value-added tax (VAT/IVA), less in income tax (ISR), and less in the IEPS excise tax on gasoline and diesel, because of the tax break that keeps pump prices in check.

Deficit smaller than planned

According to the ministry, the cumulative budget deficit through August was 739 billion pesos. That is 276 billion pesos less than the 1.015 trillion pesos planned for the period. The ministry credited mainly higher VAT collection, oil revenue and import duties.

Taxes: VAT offsets falling income tax

  • Tax revenue: 3.857 trillion pesos, up 0.6% in real terms from a year earlier.
  • VAT: 1.189 trillion pesos, up 11.4%. August alone brought in 148.154 billion pesos, up 23%.
  • Income tax (ISR): about 1.997 trillion pesos, down 5.6%.
  • IEPS on gasoline and diesel: 277.08 billion pesos, down 5% for the period. In August it fell 23.6% because of tax breaks that offset higher international fuel prices.
  • Oil revenue: 690.4 billion pesos, up 10.5%.

Spending, investment and debt

Net spending totaled 6.4 trillion pesos, up 3.3%, according to the report. Physical investment reached 539.489 billion pesos, up 1.9% from 2025. In August it grew 22.3%, the first month this year with an annual increase. Debt service costs were 122 billion pesos below budget and fell 3.5% in real terms.

At the end of August, net federal government debt stood at 48.4% of GDP. The Historical Balance of Public Sector Borrowing Requirements (SHRFSP), the broadest measure of public debt, reached 51.5% of GDP. The ministry expects it to end 2026 at 54%.

What it means for your wallet in Cancún

  • Gasoline: under the tax break, the government gives up part of the IEPS tax on every liter. That cushions pump prices when oil rises, but the support is adjusted weekly and can change. Before filling up, compare prices in Profeco's "Quién es Quién en los precios de los combustibles" fuel price report.
  • VAT: you pay it on almost everything you buy. Ask for an invoice (factura) when you can deduct it, especially if you are self-employed or run a business.
  • City and state budgets: part of what Quintana Roo and Benito Juárez receive comes as federal revenue-sharing (participaciones), which depends on federal tax collection. How taxes such as ISR and VAT perform affects the money available for local services.

The ministry publishes the full monthly report, with annexes, on its public finance website.

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