Income inequality in Mexico is extremely high and the federal states are considerably heterogeneous, which is why a regional analysis allows us to identify the fundamental characteristics, trends, and regional conditions for the implementation of redistributive policies. We used microdata from the National Household Income and Expenditure Survey (ENIGH) to analyze the evolution of income inequality in the state of Veracruz during the 2008-2020 period; To identify its sources and investigate how it was affected by monetary transfers, the income decomposition method is used to identify the ENIGH income sources and investigate preliminary COVID-19 effects. The results show evidence of a decrease in inequality in the period; relatively and marginally, it is identified that the observed decrease can be attributed to cash transfers. In recent years, transfers represented 30% of the income of the lowest deciles (I, II, and III) and the income elasticity of the Gini coefficient indicates that their increase represents a decrease in inequality.