Mexico’s Simplified Trust Regime (RESICO) could undergo some of its most significant changes since its introduction in 2022.

The proposed 2027 tax reform includes several important modifications for individual taxpayers, including increasing the annual income limit from MXN 3.5 million to MXN 5 million, allowing certain taxpayers to reenter the regime, and introducing an alternative method for calculating Value Added Tax (VAT).

At first glance, these changes appear beneficial, particularly for freelancers, independent professionals, consultants, small business owners, and foreign residents conducting business in Mexico.

However, tax simplification does not necessarily mean lower taxes for everyone.

Understanding how these changes could affect different taxpayers is essential before making any decisions.

1. What Is the Current Status of the RESICO 2027 Reform?

As of October 21, 2026, the proposed amendments to Mexico’s Income Tax Law (Ley del Impuesto sobre la Renta, or LISR) have been approved by the Chamber of Deputies and are progressing through the Senate.

The reform includes proposed modifications to Articles 113-E, 113-F, and 113-H of the Income Tax Law, which regulate the Simplified Trust Regime for individuals.

These changes are not yet in effect.

Before becoming legally enforceable, the reform must complete the legislative process and be published in Mexico’s Official Gazette (Diario Oficial de la Federación, or DOF).

Until then, taxpayers must continue complying with the rules currently in force for 2026.

2. Increasing the Annual Income Limit from MXN 3.5 Million to MXN 5 Million

Under the current legislation, individuals wishing to participate in RESICO must generally have annual qualifying income not exceeding MXN 3,500,000.

The proposed reform would increase this threshold to MXN 5,000,000.

This modification could significantly expand access to the regime, particularly for individuals whose businesses have grown beyond the existing income limit.

For example, consider an independent consultant generating MXN 4,500,000 in annual revenue.

Under the current rules, this individual cannot remain in RESICO after exceeding the applicable income threshold.

Under the proposed 2027 rules, the same taxpayer could potentially qualify, provided all other legal requirements are satisfied.

Importantly, increasing the income threshold does not eliminate the other restrictions established under Article 113-E.

Certain individuals who are shareholders or partners in legal entities, receive specific categories of income, or fall under other statutory exclusions may still be ineligible.

The proposed reform would also maintain the maximum RESICO income tax rate of 2.5%.

This is particularly relevant because RESICO income tax is generally calculated on gross income actually received, without deducting business expenses.

For taxpayers with relatively low operating costs, the difference compared with Mexico’s ordinary individual income tax regime can be substantial.

3. Could Taxpayers Who Previously Left RESICO Return in 2027?

Another important proposal involves allowing certain individuals to return to RESICO after previously leaving the regime.

Under the existing framework, losing eligibility can create significant consequences, particularly when the taxpayer was removed due to failure to comply with tax obligations.

The proposed changes seek to make reentry more flexible for qualifying taxpayers who have regularized their tax situation.

This could benefit individuals who were previously excluded but subsequently fulfilled their outstanding obligations.

However, several situations must be distinguished:

• Taxpayers who exceeded the previous MXN 3.5 million income limit.
• Taxpayers who were removed due to compliance failures.
• Taxpayers who became ineligible because of their ownership interests in companies or other statutory restrictions.

These situations may not receive identical treatment.

In addition, the proposal contemplates changes to the transition rules for taxpayers who exceed the new MXN 5 million threshold.

Under the proposed mechanism, taxpayers exceeding the limit would generally move out of RESICO beginning the following month, while income tax payments already made under RESICO would retain their definitive character, subject to the final statutory provisions.

This could reduce some of the complications associated with transitioning between tax regimes.

Nevertheless, taxpayers should not assume that previous exclusions will automatically be reversed.

Eligibility must be evaluated individually, based on the final legislation and the taxpayer’s compliance history.

4. A New Optional 7% VAT Calculation Method

Perhaps the most interesting proposed modification involves Value Added Tax.

Currently, individuals participating in RESICO generally calculate VAT under the ordinary rules established by Mexico’s VAT Law.

In simplified terms, taxpayers calculate VAT on their taxable transactions and subtract the VAT paid on eligible business expenses and purchases.

The proposed reform introduces an alternative calculation method under which qualifying taxpayers could determine their VAT liability by applying an effective rate of 7% to the value of eligible taxable transactions actually collected, without claiming the usual input VAT credits.

However, an important distinction must be made.

This does not mean Mexico’s standard VAT rate would decrease from 16% to 7%.

The statutory VAT rates applicable to transactions would remain unchanged.

Instead, the proposal would introduce an alternative mechanism for determining the amount payable to the Mexican Tax Administration Service (SAT).

Based on published analyses of the proposal, taxpayers electing this alternative would generally be required to maintain it throughout the corresponding fiscal year.

Therefore, determining whether the option is beneficial would require evaluating the taxpayer’s complete business model, rather than simply comparing the percentages.

5. Practical Example: An Independent Consultant

Consider a self-employed consultant who generates MXN 100,000 in monthly revenue, excluding VAT.

Assume the consultant incurs relatively few expenses and has MXN 2,000 in eligible input VAT credits.

Under the traditional VAT calculation method:

In this hypothetical example, the proposed alternative would reduce the monthly VAT payment by MXN 7,000.

Over twelve months, assuming identical operating conditions, the difference could reach MXN 84,000.

This type of situation is common among independent consultants, software developers, designers, and other professionals who provide services primarily through their own work and have relatively low VAT-bearing operating expenses.

For these taxpayers, the proposed option could be financially attractive.

However, the result would be different for businesses with substantial purchases or investments.

6. Practical Example: A Business with Significant Expenses

Now consider a retailer generating the same MXN 100,000 in monthly revenue.

Unlike the consultant, the retailer purchases inventory and incurs other expenses that generate MXN 12,000 in eligible input VAT credits.

In this scenario, the proposed simplified calculation would result in an additional MXN 3,000 in monthly VAT.

Over a year, that difference could amount to MXN 36,000.

The reason is straightforward: the taxpayer would be giving up valuable input VAT credits.

This illustrates why the proposed alternative should not automatically be viewed as a tax benefit.

For businesses with significant inventory purchases, equipment investments, or other VAT-bearing expenses, the traditional method could remain preferable.

When Does the 7% Option Stop Being Attractive?

For a taxpayer whose revenue is entirely subject to the standard 16% VAT rate, the theoretical break-even point occurs when eligible input VAT equals 9% of taxable revenue.

For example, on MXN 100,000 of monthly taxable revenue:

• Output VAT at 16%: MXN 16,000.
• Break-even input VAT: MXN 9,000.
• Traditional VAT payable: MXN 7,000.
• Proposed simplified VAT payable: MXN 7,000.

Below this level of input VAT, the proposed simplified calculation could produce a lower payment.

Above this level, the traditional VAT mechanism could be more favorable.

These examples are illustrative and assume transactions subject to the standard 16% VAT rate. They do not account for withholding taxes, VAT balances carried forward, zero-rated transactions, exempt activities, or other factors that could affect the calculation.

7. Changes for Agricultural, Livestock, Forestry, and Fishing Activities

The proposed reform also includes an increase in the income tax exemption available to qualifying individuals exclusively engaged in agricultural, livestock, forestry, or fishing activities.

The exemption threshold would increase from MXN 900,000 to MXN 1,000,000 annually.

This change could provide additional relief to small producers operating within these sectors.

However, the exemption is not available to every RESICO taxpayer.

It applies only when the specific requirements established for qualifying primary-sector activities are satisfied.

8. Additional Administrative Simplification Measures

The 2027 tax reform package has also included discussions of administrative measures intended to simplify compliance for small taxpayers.

These include potential changes to filing procedures, payment frequency, and the integration of income tax and VAT information into simplified reporting mechanisms.

Some of these measures may require additional administrative regulations rather than amendments to the Income Tax Law alone.

Consequently, their final scope should be reviewed once the legislative process has concluded and the SAT has issued the corresponding rules.

Taxpayers should distinguish between changes expressly approved through legislation and administrative simplifications that remain under consideration.

9. Practical Example: A Taxpayer Who Exceeds the Current RESICO Income Limit

Consider a self-employed professional with the following annual revenue:

During 2026, this taxpayer exceeds the existing MXN 3.5 million threshold and would be required to leave RESICO in accordance with the rules currently in effect.

However, if the proposed reform is enacted, the taxpayer could potentially qualify for RESICO again in 2027, subject to the final reentry provisions and all other eligibility requirements.

The financial implications could be significant.

Under RESICO, income tax is generally calculated using reduced rates applied to gross income actually collected.

Under the ordinary business and professional activities regime, taxable income is determined after considering eligible deductions, with progressive individual income tax rates potentially reaching 35%.

Nevertheless, RESICO is not automatically the most advantageous regime for every taxpayer.

A business with high deductible expenses and relatively low net profitability may produce a different outcome from a professional services business with limited operating costs.

Therefore, the correct comparison must consider profitability, deductible expenses, and the taxpayer’s complete financial circumstances.

10. What About Foreign Residents and Expats Living in Mexico?

The proposed changes could also be relevant to foreign nationals who are Mexican tax residents and conduct qualifying business or professional activities.

Mexican tax residency is not determined solely by nationality or immigration status.

Foreign nationals who qualify as Mexican tax residents may, in principle, access RESICO when they satisfy the applicable legal requirements.

However, certain restrictions are particularly relevant to internationally mobile taxpayers.

Ownership of Foreign Companies

Individuals who own shares or ownership interests in foreign legal entities must carefully evaluate the restrictions under Article 113-E.

Increasing the income threshold does not automatically make shareholders eligible for RESICO.

Foreign Investment Income

Foreign dividends, interest, capital gains, and investment structures may create additional eligibility issues.

The legal classification of each income source and the taxpayer’s ownership interests should be reviewed before assuming that RESICO is available.

Services Provided to Foreign Clients

Freelancers and consultants providing services to customers outside Mexico should also analyze the VAT treatment of their transactions.

Certain qualifying exports of services may be subject to a 0% VAT rate under Mexican law.

Therefore, taxpayers who currently apply the zero rate should not assume that the proposed 7% simplified method would be beneficial or even applicable to their specific transactions.

The final rules will be particularly important for this category of taxpayers.

11. Frequently Asked Questions About RESICO 2027

Can I earn MXN 5 million under RESICO during 2026?

No. The current annual income threshold remains MXN 3.5 million for 2026.

The proposed increase to MXN 5 million has not yet taken effect.

Will RESICO income tax rates increase in 2027?

The proposal maintains the existing maximum rate of 2.5%.

The principal change would be the expansion of the income threshold.

Can someone who previously lost RESICO eligibility return in 2027?

Potentially, depending on the reason for exclusion and the final reentry provisions.

Taxpayers should not assume that previous exclusions will automatically disappear.

Does the proposed 7% VAT option mean invoices should charge 7% VAT?

No.

The proposal concerns an alternative VAT calculation mechanism. It does not automatically replace the statutory VAT rates applicable to taxable transactions.

Would the 7% VAT calculation be mandatory?

The proposed mechanism is presented as an optional alternative for qualifying taxpayers.

Those who do not elect it would generally continue applying the traditional VAT calculation method.

Could I use the 7% method only during certain months?

Published analyses of the proposal indicate that the election would generally apply throughout the fiscal year.

Consequently, the decision should be based on projected annual transactions, not merely on the outcome of an individual month.

Would the new income threshold automatically allow company shareholders to use RESICO?

No.

The restrictions concerning ownership interests in legal entities would still need to be evaluated under the applicable provisions of Article 113-E.

How would the changes affect freelancers working for US or European clients?

The higher income threshold could allow more qualifying freelancers to remain in RESICO.

However, the VAT implications would depend on the nature of the services, the location and status of the customer, and whether the transactions qualify for zero-rated treatment.

Conclusions

The proposed RESICO 2027 reform could substantially change the tax environment for self-employed individuals, independent professionals, freelancers, and small business owners in Mexico.

Increasing the annual income threshold from MXN 3.5 million to MXN 5 million would potentially expand access to one of Mexico’s most attractive individual income tax regimes.

The proposed reentry provisions could also provide new opportunities for taxpayers who previously left RESICO and subsequently regularized their tax affairs.

However, the optional 7% VAT calculation deserves particularly careful consideration.

For service providers with limited VAT-bearing expenses, the alternative could represent meaningful tax savings.

For businesses with significant inventory purchases, investments, or operating expenses, abandoning the traditional input VAT credit mechanism could increase the tax burden.

Foreign residents and internationally active taxpayers should be especially cautious, as company ownership, foreign investment income, and cross-border service transactions may create additional eligibility and VAT considerations.

Ultimately, a simpler tax calculation does not necessarily mean a lower tax liability.

Each taxpayer should evaluate their revenue, operating costs, investments, and legal eligibility before deciding whether the proposed alternatives would be advantageous.

Finally, as of October 21, 2026, these changes remain subject to completion of the legislative process and publication of the final legislation.

Until the reform becomes effective, taxpayers must continue applying the existing RESICO rules.

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