Taxation of winnings for players (Mexico)

Short answer

In Mexico, winnings (lotteries, sweepstakes, betting games, and contests) are subject to income tax (ISR) under a special chapter for "premiums." The tax is usually withheld by the organizer and for most lotteries/draws consists of: federal 1% ISR + local (state) tax ≈6% - a total of about 7% (the exact percentage depends on the state).

Legal framework: how it works in law

Which is considered a "premium." Art. 137 of the ISR Act: income from bonuses includes amounts from lotteries, draws, betting games and contests held legally.

Betting and withholding. Art. 138:

for lotteries/draws/contests - 1% of the federal ISR for a ticket/receipt (without deductions), provided that the state either does not levy a local tax on such income, or charges it no higher than 6%;
if the state sets over 6%, the federal premium ISR rate jumps to 21%;
for "betting games" (casino/bets, etc.) - 1% of the federal ISR of the total amount distributed among the winners. The retention is made by the payer of the prize, and, as a rule, this is the final retention (subject to the conditions of Article 90).

💡 In practice, a summary table is published for Lottery National prizes by state: 1% federal + 6% local = 7% (in a number of states), but the local percentage must be viewed at your operator/in your state.

Lotteries vs. "betting games": what's the difference for a player

Lotteries/draws/contests. The organizer withholds federal 1% and local state tax (often 6%), issues a fiscal receipt with amounts and deductions.

Betting games (casino/betting events allowed by SEGOB). Under Art. 138, there is also a 1% federal ISR for distributable winnings; details of the standard component depend on local law and operator practice. Always check the withholding and fiscal check.

When "21%" occurs

If the state has set the local tax on premiums above 6%, the federal ISR rate for lotteries/draws/contests premiums rises to 21% (as directly written in article 138). For players, this is a rare scenario, but legally it is provided.

Duties of the resident: declaration of large amounts

A Mexican resident player is required to report in the annual declaration (Article 90 LISR) prizes/bonuses, loans and gifts if they exceed MXN 600,000 in total for the year - this is an informative disclosure. Failure to comply may result in amounts being recognised as taxable as "other income" in excess of deductions.

Who else pays taxes (not a player)

The gambling sector in Mexico also incurs operator taxes, for example IEPS (excise tax) on the activities of games and draws - this is the level of the operator, not the player. The media regularly emphasize that in addition to ISR, the sector has an IEPS load, but for the winner this is not an additional payment from the prize.

Calculation examples (simplified)

1. Lottery in the state with typical rates

You won MXN 100,000. Hold 1% of federal ISR (1,000 MXN) + 6% of local (6,000 MXN) → in hands ~ 93,000 MXN. You receive a check/CFDI with retention amounts.

2. Casino/" betting game"

Winning 50,000 MXN. Under Art. 138 will retain 1% of the federal ISR (500 MXN); local component is possible - check with the operator in your state (see check and conditions).

3. State with local tax> 6% (for lotteries/draws)

Winning 100,000 MXN; the federal rate "jumps" to 21% due to the high local state rate - the withholding will be significantly higher than the usual 7%. Check local norms prior to participation.

Frequent questions

Do I need to pay extra after the deduction?

In many cases, no: withholding at source counts as final if you correctly reflect income under Art. 90 LISR. But in certain situations (for example, total income/obligation to file an annual), you reflect the premium in the statements and read out the deduction.

Winnings received abroad - what to do resident?

Residents of Mexico are taxed on world income and are required to report the corresponding amounts in the annual declaration (the "global" coverage rule for resident income in LISR). Consider possible double taxation agreements.

Why is there "7% on lotteries" on the Internet?

Because in practice, a bunch of 1% federal + 6% local often works (see the National Lottery table by state). But this is an average picture: check your staff and type of prize.

Heard about "21%" - is it true?

Yes, but conditionally: such a federal rate is applied under Art. 138 LISR only if the state imposed premiums above 6%. For most players, the usual bunch ~ 7% is valid.

What to do the player in practice

1. Take a fiscal document from the organizer/casino: there must be the amount of winnings and withheld taxes.

2. Check your staff (Lottery National has a table of rates: federal 1% and local interest).

3. If for the year your prizes/loans/gifts> 600,000 MXN - report it in the annual return to avoid tax "variance."

4. Keep documents (CFDI/receipts) - they confirm retention at source and come in handy for credit/reporting.

In Mexico, player winnings are "premium revenues" under LISR; base withholding: 1% federal ISR, plus local state tax (typically up to 6%, totaling about 7% for lotteries/draws; for "betting games" - 1% federal + local rules).

If the state takes> 6%, the federal rate for lotteries/draws rises to 21%.

Residents are required to inform about prizes in the annual if the aggregate amount with loans/gifts exceeds 600,000 MXN. Keep documents, check your state rates and fiscal receipts from the organizer.

💡 This is general information, not individual tax advice. For details on your situation (state, residency status, foreign winnings), contact your tax advisor.