The Congress of the Republic of Guatemala approved Decree Number 13-2026 (hereinafter, the “Decree”), by means of which reforms are introduced to the Tax Update Law (Decree 10-2012).
The reform responds to an adjustment in the taxation regime on employment income, with the objective of aligning it in a better manner with the principle of ability to pay and reducing regressive effects, particularly at the lowest salary levels.
Main modifications
1- Adjustment to the deduction for personal expenses
The amount of the applicable deduction is redefined, allowing the deduction of an equivalent of up to 12 monthly minimum wages for non-agricultural activities, including the incentive bonus.
Likewise, the possibility of crediting up to Q12,000.00 for VAT paid on personal expenses is maintained, provided that such amounts are duly supported.
This adjustment directly affects the determination of taxable income by expanding the deduction margin available to taxpayers in an employment relationship.
2- Incorporation of an automatic update mechanism
Article 72 Bis is added, through which it is established that the amount of the deduction will be updated automatically each year based on variations in the minimum wage.
For purposes of its application, the Superintendence of Tax Administration (SAT) must publish the updated values in a timely manner and adapt the corresponding compliance instruments.
3- Clarifications to the withholding system
Article 76 is reformed to adjust the withholding calculation mechanism. As a result, the employer must project the worker’s annual net income considering the deduction in force and, on that basis, determine the tax to be withheld proportionally during the fiscal period.
The adjustment seeks for the withholdings made throughout the year to reflect the taxpayer’s final tax obligation with greater precision.
4- Extraordinary deduction for fiscal period 2026
As a transitional measure, an additional deduction of Q3,024.00 is established, applicable to employment income in an employment relationship during fiscal period 2026, without the need for verification.
This adjustment is intended to generate immediate relief in the tax burden of the taxpayers covered by this regime.
Although this reform was approved by the Congress of the Republic of Guatemala, it continues in the process of approval by the Executive Branch.
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