Introduction
As we approach April 2025, it’s time for individual taxpayers to submit their annual tax declarations. Understanding which personal expenses and tax incentives can be deducted is crucial to reduce tax burden or improve the favorable balance. The Servicio de Administración Tributaria (SAT) emphasizes the importance of having electronic invoices for each service or product, ensuring the correct Registro Federal del Contribuyente (RFC), and making payments via electronic fund transfer, credit or debit card, or nominative check to the person claiming the deduction.
Personal Deductions and Tax Incentives
Javier Cornelio Román, a specialist from the General Direction of Guidance and Advice to Taxpayers by Remote Means of the Procuradoría de la Defensa del Contribuyente (Prodecon), outlines the following personal deductions and tax incentives available for taxpayers in their 2025 annual declarations:
1. Medical Expenses
This category includes payments for medical, dental, and professional services in psychology and nutrition; hospital, nursing, laboratory, or clinical study expenses; purchasing or leasing rehabilitation equipment for patients due to disabilities; and medications issued by hospital institutions.
These deductions apply to the taxpayer, their spouse or cohabitant, as well as ascendants and direct descendants (excluding the taxpayer) who do not earn income equal to or greater than the 2025 Unidad de Medida y Actualización (UMA) of 41,273.52 pesos.
Payment methods include nominative checks and electronic fund transfers from accounts in the taxpayer’s name, or via credit, debit, or service cards, all covered by the Comprobante Fiscal Digital por Internet (CFDI).
2. Funeral Expenses
This deduction applies to the taxpayer, their spouse or cohabitant, as well as ascendants and direct descendants.
Income of the beneficiaries should not exceed the annual UMA (41,273.52 pesos). The transaction must be covered by a CFDI and is deductible when the service is used, not when a future plan is purchased. Payment methods are flexible in this case.
3. Charitable Donations
This category includes non-remunerated, non-obligated donations to the Federal Government, states, municipalities, and decentralized bodies, as well as authorized institutions by the SAT.
The deduction is limited to 7% of the cumulative income from the previous tax year. For example, if a person earned 100,000 pesos in 2024, they can deduct up to 7,000 pesos in 2025.
4. Real Interest on Home Loans
This applies to interest derived from home acquisition credits obtained through financial system instruments. The issuing institution will provide a fiscal document indicating the real interest amount eligible for deduction.
The total credit amount per dwelling should not exceed 750,000 Unidades de Inversión (Udis), approximately 6.5 million pesos.
5. Voluntary Contributions
These are direct contributions to the complementary retirement account, personal retirement plans (PPR), or voluntary contributions to the corresponding sub-account.
The deduction is capped at 10% of cumulative income, with contributions not exceeding five UMAs raised to the annual rate. For instance, if a person earns 656,269.73 pesos in a year, the deduction limit is 65,626.97 pesos, and five UMAs amount to 206,480.50 pesos.
6. Major Medical Expenses
This deduction applies to the taxpayer, their spouse or cohabitant, as well as ascendants and direct descendants.
7. Mandatory School Transportation
This applies to direct descendants. The fiscal document must explicitly state the amount for transportation services. Payment methods include nominative checks and electronic fund transfers from accounts in the taxpayer’s name or via credit, debit, or service cards.
Tax Incentives
According to Prodecon’s representative, the Income Tax Law (ISR) also foresees other reductions to a taxpayer’s taxable base, including Personal Retirement Plan (PPR) stimuli. These deductions cannot exceed 152,000 pesos, independent of personal deductions.
Another tax incentive is for private middle-level basic education tuition fees, applicable to the taxpayer, their spouse, as well as ascendants and direct descendants.
