Mexico: Strengthening of "health taxes" on tobacco and sugary drinks starting in 2026

From 1In January 2026, Mexico will implement significant tax increases on cigarettes and sugary drinks as part of the 2026 Economic Package, aimed at reducing consumption of products associated with high health risks and strengthening public funding for prevention and care. These measures include a substantial increase in the rate of the Impuesto Especial sobre Producción y Servicios (IEPS) on tobacco products, as well as a near doubling of the tax per liter on sugary drinks, including those containing artificial sweeteners.[1]. These increases are part of a strategy to combat the commercial determinants of health, in other words, the strategies and influences of industries that promote the accessibility, attractiveness and promotion of products that cause many non-communicable diseases.

A tightening of taxes on tobacco products

The tax reform adopted by the Mexican authorities includes a substantial increase in tobacco product taxation starting in 2026. The ad valorem rate of the IEPS (Tobacco Products Excise Tax) applicable to cigarettes will rise from 160 % to 200 % of the retail price, significantly increasing the tax share of the final price. This measure is complemented by a gradual increase in the specific tax per cigarette, set at 0.8516 pesos per unit in 2026 (approximately €0.04), and slated to increase annually until the end of the decade to maintain a deterrent effect over time and account for inflation.

The consequences of this reform are already visible in the new price lists sent to retailers. This reform will result in a price increase for cigarettes of between 15 and 22 pesos per pack, depending on the brand and the number of cigarettes in each pack. While the new prices are scheduled to take effect on January 1, 2026, some brands have indicated that the adjustments could be implemented in the following days of January. As a result, several commonly consumed brands will see the price of their pack of twenty cigarettes exceed 100 pesos, or approximately €5. Some brands will reach 103 pesos (approximately €5.15) and even 105 or 106 pesos (approximately €5.25 to €5.30), whereas previous prices were mostly below this threshold. Tax authorities stress that the main objective of this increase is not solely budgetary, but that it aims above all to reduce the economic accessibility of tobacco, a lever recognized as the most effective way to reduce consumption.

A parallel increase in taxes on sugary drinks

The text of the "2026 Economic Package" also includes a significant increase in taxes on sugary drinks, another product category strongly associated with non-communicable diseases. The specific tax per liter applied to drinks containing added sugars will increase from 1.64 pesos to 3.08 pesos per liter, almost doubling the amount, which corresponds to approximately €0.09 to €0.17 per liter. This measure applies to industrially produced sodas and flavored drinks, including those made from concentrates or syrups.

For the first time, certain beverages containing non-caloric sweeteners, often presented as healthier alternatives, will also be included in the tax system, in order to limit substitution effects and better regulate the entire range of industrially produced beverages. In a country where the consumption of sugary drinks remains particularly high and where the prevalence of obesity and diabetes constitutes a major public health challenge, the authorities aim to modify consumption patterns through price controls, while simultaneously increasing available public resources.

As with tobacco, the revenue from this increase is not subject to a specific legal earmarking for prevention programs, but the government indicates that it will contribute to the overall financing of the health system.

A reform that is part of an approach to the commercial determinants of health

By simultaneously targeting tobacco and sugary drinks, the Mexican tax reform illustrates an approach based on the commercial determinants of health, a concept that refers to the set of economic, commercial, and marketing strategies by which certain industries influence consumption environments and expose the population to harmful products. These determinants include, in particular, attractive pricing policies, high product availability, intensive promotional strategies, and lobbying efforts aimed at preventing, limiting, or delaying health regulations.

The tobacco and sugary drink industries share similar economic logics and tactics, relying on sales volume and maintaining accessible markets, particularly among the most vulnerable populations. In this context, tax policies appear as a structuring tool for rebalancing these environments by incorporating a portion of the health and social costs generated by these products into their prices. Increasingly, countries are thus using so-called "health taxes" as a lever fully integrated into prevention policies, in order to influence the economic factors that shape consumer behavior.

©Generation Without Tobacco

AE

[1] Alejandro Alegría, Suben hasta 20% cigarros and refrescos por entrada de impuestos saludables, La Jornada, published on December 27, 2025, accessed on December 29, 2025