Mexico's Tax Administration Service (SAT) recorded a 6.2% real decline in total income tax (ISR) revenues in the first half of 2026, the deepest contraction since 2009, with a total collection of 1.572 trillion pesos. The manufacturing sector was the hardest-hit component: collections collapsed 15.75% in real annual terms, from 344,533 million pesos in the first half of 2025 to 290,272 million in the same period of 2026, according to data published by El CEO based on SAT figures.

Manufacturing weakness has now accumulated 34 consecutive months of contraction in the sectoral employment index through May 2026. The manufacturing industry accounts for 18.5% of all ISR revenues in Mexico, so its sustained deterioration directly affects public finances. The pattern extends to other sectors: corporate administration ISR fell 43.19% in real terms; electricity, water, and gas supply dropped 38.40%; and construction declined 24.48%. This coexists with a broader economic recovery: Bloomberg Línea reported that GDP grew 2.2% year-on-year in the second quarter of 2026, with a quarterly advance of 1.5%, the largest since 2020, indicating that manufacturing's fiscal contraction coexists with recovery signals in other segments of the economy.

Despite the drop in revenues, the number of taxpayers filing ISR declarations grew from 5.102 million to 5.218 million individuals during the period, indicating that the problem lies in income levels rather than evasion or a shrinking tax base. The manufacturing slowdown coincides with elevated tariffs and ongoing debates over USMCA renegotiation, factors that have led several manufacturers to adjust their investment plans while awaiting clarity on the new rules of origin that Washington seeks to incorporate into the trade agreement.

Second-half 2026 data, to be published in the coming months, will provide the first reading on whether manufacturing contraction stabilizes as USMCA negotiations advance. The Finance Ministry (Secretaría de Hacienda) is scheduled to publish its updated public finance estimate during August.

This article was drafted with artificial intelligence assistance from verified sources and reviewed by a human editor before publication.