Platforms withholdigns for 2026

If you have a rental property and earn income through digital platforms like AirBnB, VRBO, HomeAway, etc. there are some changes to how the tax withholdings work that will go into effect on January 1st, 2026.

How withholdings currently work

These are the withholding scenarios valid through December 31st, 2025:

Type of taxpayer	Income tax withholding	IVA (VAT) withholding
Individual with an RFC number	4%	8%
Individual or corporation without an RFC number	20%	16%
Corporation with an RFC number	0%	0%

What's changing?

As of January 1st, 2026 whether an owner has an RFC number or not or whether they are a corporation or not will no longer be the only factors that affect tax withholdings.

One of the changes is that corporations will no longer be exempt from withholdings and platforms will have to withhold 2.5% on the gross for income tax and 50% of the IVA (8%) when the listing is in a corporation's name and its RFC number has been provided to the digital platform. Just like individuals, they will get a credit in their monthly and yearly returns for the income tax that was withheld throughout the year. As for IVA, the withheld amounts will be applied to their monthly filings given the fact that IVA is a monthly tax.

The second big change pertains to where payouts are sent as platforms allow users to have their payouts sent to foreign accounts which is usually attractive to owners as, that way, they avoid money losses from foreign exchange rates. As of January 1st, if platforms send payouts to foreign accounts, they will have to withhold all of the 16% IVA, regardless of the type of taxpayer.

This will be the applicable withholdings once these changes go into effect:

Type of taxpayer	Income tax withholding	IVA (VAT) withholding
Individual with an RFC number (payouts sent to a Mexican bank account)	4%	8%
Individual with an RFC number (payouts sent to a foreign bank account)	4%	16%
Corporation with an RFC number (payouts sent to a Mexican bank account)	2.5%	8%
Corporation with an RFC number (payouts sent to a foreign bank account)	2.5%	16%
Individual or corporation without an RFC number	20%	16%

How will this affect your cash flow?

For this example, let's assume an individual with an RFC number earns $1,000 in gross income and spends $500 in deductible expenses before IVA. The way withholdings currently work, their payout is calculated as follows:*

Gross rental	$1,000
(+) IVA on rental	$160
(=) Guest payment	$1,160
(-) IVA wihholding	$80
(-) Income tax withholding	$40
(=) Owner payout	$1,040

*Note: This example is leaving out platforms' fees and the local lodging/hospitality tax for simplicity's sake.

Then come the deductible expenses:

Payout received	$1,040
(-) Deductible expenses	$500
(-) IVA on deductible expenses	$80
(=) Cash left after expenses	$460

When that month's IVA filing is submitted, the calculation looks like this:

Gross income	$1,000
(x) IVA rate	16%
(=) Collected IVA	$160
(-) IVA withholdings	$80
(-) IVA credit on deductible expenses	$80
(=) IVA due	$0

Because half the IVA was withheld and the other half was paid to vendors, the owner's IVA due is zero, so they can keep the $460 that were left after expenses.

If as of January 1st, 2026 this payout was received in a foreign bank account, the corresponding payout would be calculated the following way:

Gross rental	$1,000
(+) IVA on rental	$160
(=) Guest payment	$1,160
(-) IVA wihholding	$160
(-) Income tax withholding	$40
(=) Owner payout	$960

Then, when it came to paying for expenses, the numbers would look like this:

Payout received	$960
(-) Deductible expenses	$500
(-) IVA on deductible expenses	$80
(=) Cash left after expenses	$380

And, finally, the IVA filing would be calculated as shown below:

Gross income	$1,000
(x) IVA rate	16%
(=) Collected IVA	$160
(-) IVA withholdings	$160
(-) IVA credit on deductible expenses	$80
(=) IVA in favor (credit)	$80

As you can see, the owner in this example would end up with less cash and with an IVA credit which doesn't get lost as it can be carried forward and used to offset future IVA bills or for which a refund can be requested. In this regard, it is very important to bear in mind that refunds are complicated, time-consuming, and often rejected.

If you want to avoid these cash flow issues, you will need to register a Mexican bank account as your payment method with all platforms that you work with.