Mexico’s Finance Ministry to Raise the IEPS on Gasoline and Diesel in 2026: What Changes and How It Could Show Up at the Pump
Mexico’s Ministry of Finance and Public Credit (SHCP) will update, starting January 1, 2026, the per-liter rates of the Special Tax on Production and Services (IEPS) applied to gasoline, diesel, and other fuels, as part of the annual mechanism that adjusts these taxes in line with inflation. The decision was published in Mexico’s Official Gazette (Diario Oficial de la Federación, DOF) and follows the rule set out in law so the tax maintains its real value in purchasing-power terms.
The 2026 adjustment was calculated using an update factor of 1.0379, based on the movement of Mexico’s National Consumer Price Index (INPC) between November 2024 and November 2025. In practice, that means the per-liter IEPS charge rises in step with inflation over that period, without implying a tax overhaul or the creation of a new tax.
Once the new rates take effect, the federal IEPS per liter will be set at 6.7001 pesos for gasoline under 91 octane (regular), 5.6579 pesos for gasoline of 91 octane or higher (premium), 7.3634 pesos for diesel, and 5.6579 pesos for non-fossil fuels. In addition, the rates for the environmental component applied to fossil fuels will be updated, as will the portion of the IEPS that is transferred to Mexico’s states through the “state” per-liter fees for regular gasoline, premium gasoline, and diesel.
The announcement is often read as an automatic increase in retail prices, but the final effect at the service station isn’t mechanical. What consumers pay depends on a mix of variables: global crude and refined-product (gasoline) prices, the peso–dollar exchange rate—critical because much of Mexico’s fuel supply and pricing benchmarks are dollar-denominated—logistics and marketing margins, and, importantly, the tax rebates/subsidies (fiscal “stimuli”) the federal government chooses to apply to the IEPS itself.
In Mexico, the Finance Ministry frequently uses IEPS rebates to smooth periods of high international volatility or inflation pressures, temporarily reducing the effective tax charged per liter. When global prices spike or the peso weakens, the rebate can cushion the impact; when conditions ease, the rebate tends to shrink or disappear, allowing tax revenue to normalize. For that reason, even with a higher “updated” rate on paper, the final price may move less if the government offsets part of it through rebates—or move more if the rebate is small and external shocks hit at the same time.
The IEPS update comes as Mexico’s inflation has shown stretches of cooling and renewed flare-ups, and as containing price increases remains a central goal of economic policy. For Banco de México (Mexico’s central bank), energy prices are especially sensitive because they can feed indirectly into transportation and distribution costs, though their effect on core inflation typically comes with a lag and depends on the size of the move. In that sense, any change in fuel prices is closely watched for its potential influence on inflation expectations.
From a public-finance perspective, the annual update is meant to protect the tax’s revenue-raising power. The fuel IEPS is a significant source of tax income, but it has also served as a price-policy tool: when rebates are large, revenue falls and the fiscal cost rises; when rebates are small, revenue improves, but consumer prices may face more pressure. The tradeoff among price stability, revenue, and policy signaling tends to become more complex during periods of global energy volatility.
For businesses and households, the IEPS adjustment becomes one more input in 2026 cost calculations. In transport-intensive sectors—logistics, retail and wholesale trade, some manufacturing industries, and services—fuel affects cost structures and, eventually, prices. For households, the impact may be felt both through direct spending on gasoline and through indirect effects on fares and goods that rely on transportation. Even so, the specific magnitude will depend on the level of rebates, the exchange-rate path, and conditions in global refined-products markets.
Looking ahead, fuel prices in Mexico will remain tied to external forces—geopolitical tensions, oil production decisions, global demand—and to domestic variables such as the rebate strategy, supply logistics, and regional competition among service stations. The debate will also continue over the role of the IEPS as a revenue tool, a price-stabilization mechanism, and—through its environmental component—a signal meant to internalize emissions costs, in a setting where the energy transition is advancing but fossil-fuel consumption still dominates.
In sum: the IEPS on gasoline and diesel will be adjusted for inflation starting January 1, 2026, increasing per-liter rates, but the effect on the final price will depend on variables such as oil prices, the exchange rate, and—above all—the tax rebates the Finance Ministry decides to apply. The update preserves revenue in real terms, while its inflation and logistics-cost impact will hinge on energy-market conditions and fiscal strategy throughout the year.
