Turkiye's 2025 Tax Brackets: Calculation Methods and Examples

 

Income tax is a type of tax individuals pay on their earnings, and in Turkey, tax brackets are determined based on personal income levels. The income tax brackets set for 2025 have been updated, as they are every year, considering the domestic producer price index. Taxpayers are expected to pay taxes at rates that increase progressively based on their income. In this Papel Blog post, we'll cover many different aspects of income tax in detail.

 

What Is Income Tax?

 

Income refers to an individual's net earnings and profits within a calendar year. Every individual is obligated to pay income tax. In Turkey, individuals who reside in the country or stay for more than six consecutive months within a calendar year are classified as full taxpayers and are taxed on their global income. Non-residents who earn income in Turkey are classified as limited taxpayers and are taxed only on their earnings within the country. Income subject to income tax includes the following categories:

 

• Commercial profits
• Agricultural profits
• Wages
• Self-employment income
• Real estate income (e.g., rental income)
• Investment income (e.g., interest and dividends)
• Other earnings and profits (e.g., capital gains)

 

Income tax is applied progressively to promote fairness in income distribution. Individuals must submit their annual income tax returns by the end of March each year, and the tax owed must be paid in two installments: the first by the end of March and the second by the end of July. Tax brackets define tiers of income that are taxed at progressively higher rates. These brackets are updated annually, taking into account the domestic producer price index.

 

For example, if your annual income is 500,000 TRY, the tax calculation for 2025 would be as follows:

 

15% tax on the first 158,000 TRY:

158,000 TRY × 15% = 23,700 TRY

20% tax on the next 172,000 TRY (330,000 TRY - 158,000 TRY):

172,000 TRY × 20% = 34,400 TRY

27% tax on the remaining 170,000 TRY (500,000 TRY - 330,000 TRY):

170,000 TRY × 27% = 45,900 TRY

Total tax: 23,700 TRY + 34,400 TRY + 45,900 TRY = 104,000 TRY

 

What Is Taxable Income?

 

 

Taxable income refers to the portion of a person's or entity's income after legally allowable deductions and expenses are subtracted and used as the basis for calculating income tax. Taxable income types differ based on the calculation method and the nature of income, and there are two main types of taxable income:

 

Advalorem Taxable Income

 

This type of taxable income is calculated based on a specific monetary amount. For example, the taxable base for VAT (Value Added Tax) is the sale price of goods or services, making it an instance of advalorem taxable income.

 

Specific Taxable Income

 

This type is calculated based on a specific unit or quantity. For instance, motor vehicle taxes are determined based on criteria such as engine size, vehicle age, and value, making them an example of specific taxable income.

 

What Is Cumulative Taxable Income?

 

Cumulative taxable income is the total income an employee earns throughout a year after subtracting legal deductions, such as social security and unemployment insurance contributions. This cumulative total is essential for determining which income tax bracket an employee falls into and what percentage of their income will be taxed.

 

Since Turkey's income tax system is progressive, the cumulative income increases yearly, as does the applicable tax rate. The monthly taxable income is added to the previous months' totals, forming a cumulative total for the year. This explains why net salaries received toward the end of the year may differ from those received earlier.

 

What Is an Income Tax Return?

 

An income tax return is an official document in which individuals declare their taxable income for a calendar year. This document outlines the individual's income, deductions, and the total tax owed. Submitting this return on time ensures compliance with legal tax obligations and helps avoid penalties.

 

When Should Income Tax Returns Be Submitted?

 

 

Annual income tax returns for the previous year must be submitted by the end of March of the following year. For example, income earned in 2024 must be declared by the end of March 2025. Tax returns can be filed electronically through the e-Return system on the Revenue Administration's (GİB) website. Late submissions or incomplete declarations may result in penalties such as tax evasion fines, irregularity fines, or interest charges.

 

What Documents Are Required for Income Tax Returns?

 

To file a complete and accurate income tax return, the following documents are required:

 

Income Documents

 

Proof of income such as wages, rental income, interest, or dividends

 

Expense Documents

 

Receipts for deductible expenses like education or healthcare costs

 

Previous Year's Tax Return

 

Useful for comparison and consistency

 

Other Relevant Documents

 

 

Documents related to deductions, such as donations or insurance premiums

 

What Are Tax Brackets?

 

Tax brackets are ranges of income to which specific tax rates are applied. Turkey's progressive tax system ensures that higher income levels are taxed at higher rates, promoting fairness in income distribution. Tax brackets are calculated based on a person's annual income and updated yearly.

 

For example, annual income is divided into ranges, each taxed at a corresponding rate. The taxable amount is calculated based on the gross income after specific deductions such as the employee's social security contribution (14%) and unemployment insurance contribution (1%). The cumulative income for the year determines the applicable tax bracket and rate. To learn more about tax refund, take a look here. 

 

2025 Income Tax Brackets

 

The income tax brackets for 2025, as defined under Article 103 of the Income Tax Law, are as follows:

 

Income Range Tax Rate (%)

Up to 158,000 TRY 15%

158,001–330,000 TRY 20% on the amount above 158,000 TRY

330,001–800,000 TRY 27% on the amount above 330,000 TRY

800,001–4,300,000 TRY 35% on the amount above 800,000 TRY

Above 4,300,000 TRY 40% on the amount above 4,300,000 TRY

 

When Are Tax Brackets Reset?

 

 

Tax brackets reset at the start of every calendar year on January 1. This means all taxpayers begin with a zero balance for their taxable income. As income accumulates throughout the year, it is added cumulatively to determine the applicable tax rate.

 

Depending on the circumstances, the tax bracket may be reset for employees who change jobs mid-year. However, the previous income is also considered when calculating taxes if the new job is with the same employer or an associated business.

 

 

Frequently Asked Questions

 

 

What is the domestic producer price index?

The Domestic Producer Price Index (D-PPI) measures changes in the prices of goods and services produced within the country.

 

What is non-wage income tax?

Non-wage income tax applies to earnings other than wages, such as commercial profits, rental income, or investment income. These are taxed at rates defined under the Income Tax Law (Law No. 193).

 

Sources: 1, 2.