--- title: "What You Must Know About Tax Brackets" description: "In this comprehensive guide, discover the 2023 tax brackets, the disability tax deduction, tax calculation methods and more. Learn practical tips for managing your income wisely and reducing your tax burden." url: https://www.faprika.com/en/blog/what-you-must-know-about-tax-brackets language: en site: Faprika --- # What You Must Know About Tax Brackets > In this comprehensive guide, discover the 2023 tax brackets, the disability tax deduction, tax calculation methods and more. Learn practical tips for managing your income wisely and reducing your tax burden. Tax holds an important place in our lives as a part of our earnings. But do we know how these incomes are taxed and what tax brackets are? A tax bracket refers to the percentage tax rate calculated on the income employees earn in return for their work. These rates vary according to the level of income earned and are redetermined every year. For example, in 2022 total tax revenue reached 2 trillion 353 billion TL, and this figure represented a 102% increase compared to the previous year. The determination of the minimum wage and economic conditions lead to changes in tax brackets every year. The tax brackets valid for 2023 were updated by Article 103 of the Income Tax Law No. 31696 dated 21 December 2022. In this article, we will provide comprehensive information about tax brackets, types of tax and tax calculations. That way, you will understand your tax obligations better and be able to shape your financial planning in light of this information. ## What Is Tax? **Definition of Tax** Tax is the compulsory contribution that individuals and institutions pay to the state to meet the general needs of society. These payments are vital for the continuity of public services. The taxes paid are used to meet the financing needs of the state and public bodies, and these payments play an important role in covering the state's basic expenses. Tip Track Your Income Regularly Track your income regularly in order to calculate your tax obligations correctly. This helps you avoid surprise tax debts at the end of the year. ## What Are the Types of Tax? The tax system in Turkey is diverse and can basically be examined in three main categories: **Income Taxes**: This category covers the taxes that individuals and institutions pay on the income they earn. Income taxes are divided into two subcategories: - **Corporate Tax**: The tax that companies pay on the profits they earn. - **Personal Income Tax**: The tax that individuals pay on the income they earn in return for their work. **Expenditure Taxes**: These are taxes levied on consumers' spending. The main taxes in this category are: - **Value Added Tax (VAT)**: A tax levied on the sale of goods and services. - **Special Consumption Tax (ÖTV)**: Levied on the consumption of certain products (such as alcohol, tobacco and fuel). - **Banking and Insurance Transactions Tax (BSMV)**: Levied on banking and insurance transactions. - **Stamp Duty**: Paid so that various documents gain legal validity. **Wealth Taxes**: Taxes levied on the assets owned by individuals and institutions. These include: - **Motor Vehicle Tax (MTV)**: Paid by individuals and institutions that own motor vehicles. - **Property Tax**: Paid by real estate owners. As part of economic activity and individual income, taxes hold an important place in each of our lives. In the following sections, we will examine tax brackets and the effects of these brackets on your financial planning in more detail. We recommend reading What Is an Omnichannel (Multichannel) Marketing Strategy? ## What Is Income Tax? Income tax is a type of tax paid to the state on the income earned by individuals and institutions. This tax is calculated on earnings from personal labor, investments, business activities or other sources of income. The basic purpose of income tax is to contribute to the general welfare of society and to collect the resources needed to finance the state's public services. Calculated at different rates according to the income levels of individuals and institutions, this tax forms the basis of a fair and balanced system of financial obligation. In Turkey, income tax is addressed in two main categories: personal income tax and corporate tax. This taxation plays a critical role in economic development and in supporting social services. Key Takeaway Income Tax Is Not Just a Number, It Is the Cornerstone of Economic Fairness! ## What Is Personal Income Tax? Personal income tax is a type of tax paid on the income individuals earn from their work or investments. It applies to income from various sources, such as employees' salaries, the earnings of self-employed professionals, investment income and rental income. Personal income tax is calculated at different rates depending on the individual's income level and is paid according to the tax brackets set each year. This tax plays an important role in financing the state's basic services and contributes to the general welfare of society. ## What Is Corporate Tax? Corporate tax is a tax paid on the profit earned by companies, businesses or other legal entities. It means companies pay part of their annual net profit to the state. By reflecting companies' financial performance and their contribution to the economy, corporate tax helps the state collect the resources needed for economic development and social services. In Türkiye, corporate tax rates are determined by the type of company and its income level, and are applied within the framework of legal regulations. We recommend reading What Is Hosting? What Is It Used For? (Detailed Guide) ## 2023 Income Tax Brackets The income tax brackets applied in Türkiye in 2023 differ for salaried employees and for those earning income from sources other than wages. This year, tax brackets and rates are determined according to the income levels of individuals and companies. **Individual Income Tax Brackets** Income tax brackets for salaried employees vary according to annual income. These brackets require individuals to pay tax at different rates depending on the amount of income they earn. The rates are updated every year depending on fiscal policy and economic conditions. **Corporate Income Tax Rates** For companies, tax is calculated based on annual earnings and turnover. For example, in 2023 a business with an annual turnover of 60,000 TL is liable to pay 15% of this amount as tax. Corporate tax payments must be made by the 26th day of the month in which the return is filed. Payments are usually made in two instalments: the first at the end of March and the second in July. | Income Brackets | Tax Rate | | --- | --- | | Up to 70,000 TL | %15 | | 10,500 TL for the 70,000 TL portion of 150,000 TL, plus the excess | %20 | | 26,500 TL for the 150,000 TL portion of 370,000 TL (for wage income, 26,500 TL for the 150,000 TL portion of 550,000 TL), plus the excess | %27 | | 85,900 TL for the 370,000 TL portion of 1,900,000 TL (for wage income, 134,500 TL for the 550,000 TL portion of 1,900,000 TL), plus the excess | %35 | | 621,400 TL for the 1,900,000 TL portion of amounts above 1,900,000 TL (for wage income, 607,000 TL for the 1,900,000 TL portion of amounts above 1,900,000 TL), plus the excess | %40 | Note: The income tax schedule to be applied for 2023 was announced in Income Tax General Communiqué No. 323 ## Does Someone Earning the Minimum Wage Fall into a Tax Bracket? Since 1 January 2022, tax rules applied in Türkiye have brought significant changes for minimum-wage workers. After this date, the minimum wage was made fully tax-exempt. This means that income earned at the minimum wage is not subject to deductions such as income tax and stamp duty. Likewise, for employees paid above the minimum wage, the portion of pay corresponding to the minimum wage is exempt from income and stamp tax. With this rule, the tax burden on employees' net income has been reduced and the purchasing power of the minimum wage has increased. Recommended reading What Is e-Commerce and How Is It Done? A Detailed Guide to Electronic Commerce ## Tax Brackets for Young Entrepreneurs Young entrepreneurs under the age of 29 are subject to a special arrangement regarding tax payments. With the new law published in the Official Gazette on 12 March 2023, the tax brackets for young entrepreneurs were reshaped. Under this new regulation, young entrepreneurs are exempt from income tax on income up to 150,000 TL. That is, if a young entrepreneur earns up to 150,000 TL a year, no income tax will be paid on that income. However, earnings above 150,000 TL are subject to tax, and the amount payable will be calculated according to the size of the earnings. This regulation was introduced to encourage young entrepreneurs to start and grow their own businesses, and it is an important step supporting the entrepreneurship ecosystem in Türkiye. ### Concepts to Know When Calculating Income Tax There are several important concepts to understand when calculating income tax: - **Gross Salary**: The total pay the employer pays the employee. Gross salary includes deductions and taxes and is the salary amount shown on the payroll. - **SGK Employee Share**: The contribution to the Social Security Institution (SGK), calculated as 14% of the employee's gross pay. - **Unemployment Insurance Premium**: The insurance premium against unemployment, calculated at 1% of the employee's gross salary. - **Monthly Income Tax**: Calculated according to the person's tax base; the starting rate is 15%. Depending on the cumulative tax base, it can rise to 20%, 27%, 35% and 40%. ## What Is the Income Tax Base? The income tax base is the net income remaining after the SGK employee share and unemployment insurance premium are deducted from the employee's gross pay. When calculating income tax, this base is the foundation for determining the tax amount. Recommended reading How Can You Sell Products to France Through E-export ? ### What Is the Cumulative Tax Base? The cumulative tax base is the total of the income an employee earns each month over the year. This concept is critical for determining which tax bracket the employee is in and which tax rate will be withheld. It is calculated regularly every month by employers. ## How Is Income Tax Calculated? In 2023, employees' income tax is calculated based on gross salary, SGK employee share, unemployment insurance share and the cumulative tax base. For example, the calculation for an employee with a monthly gross salary of 20,000 TL is as follows: - **SGK Employee Share**: 14% of the gross salary, i.e. 2,800 TL - **Unemployment Insurance Share**: 1% of the gross salary, i.e. 200 TL - **Income Tax Base**: The amount remaining after the SGK employee share and unemployment insurance share are deducted from the gross salary, i.e. 17,000 TL. - **Income Tax**: 15% of the base, i.e. 2,550 TL Tip Plan Early Planning before tax season begins lets you take advantage of possible deductions and avoid unnecessary delays. ## What Is the Income Tax Calculation Formula? The formula used to calculate income tax: Income Tax = (Annual Income / 100) x Tax Rate For example, for a person with an annual income of 24,000 TL whose tax base is 4,200 TL: Income Tax = (24,000 / 100) x 15 = 3,600 TL For a person with an annual income of 34,000 TL: - For the first 32,000 TL: (32,000 / 100) x 15 = 4,800 TL - For the remaining 2,000 TL: (2,000 / 100) x 20 = 400 TL - Total Tax: 4,800 TL + 400 TL = 5,200 TL These calculations help individuals and employers determine their tax obligations correctly. Recommended reading What You Need to Know About E-Export to Germany ### When Is the Tax Bracket Reset? The income tax brackets of insured employees are reset in some cases. These cases can be listed as follows: - **Starting Work with a New Employer**: When a person leaves their current job and starts working for a new employer, the income tax base is reset. - **Continuing with the Same Employer**: If an employee starts working at a different workplace belonging to the same employer, the cumulative tax base is not reset. Tax calculation at the new workplace is based on the base accumulated at the previous workplace. - **Return from Military Service or Retirement**: If an employee leaves work for military service or retirement and starts working at the same workplace again, the income tax base is not reset. ### When Is the Tax Paid? Annual income tax is paid in two instalments during the year: - For those earning commercial income under the simplified method, the first instalment is paid by the end of February and the second by the end of June. - For income not under the simplified method, the first instalment is paid by the end of March and the second by the end of July. Tip Keep Electronic Books ( e-Ledger ) Regularly update and track your tax records through e-Devlet and other electronic platforms. This prevents you from making mistakes in your tax calculations. ### Where Are Taxes Paid? Taxpayers can pay income tax at the following places: - **Tax Office of the Place of Residence** - **Tax Office of the Workplace** - **Banks** ### When Do You Enter a Tax Bracket? To enter a tax bracket, the earnings must reach a certain level. As of 2023, those earning up to 70,000 TL a year fall into the 15% tax bracket. As earnings increase, bracket rates rise to 20%, 27%, 35% and 40%. ### When Do You Leave a Tax Bracket? People in a tax bracket move to the next higher bracket when they exceed a certain income level. For example, when the income of a person earning 70,000 TL a year rises to 145,000 TL, they leave the 15% bracket and enter the 20% bracket. Tip Get Expert Advice In complex tax situations, getting professional help from an accountant or tax advisor helps you avoid incorrect filings and penalties. ### When Do Tax Brackets Change? Tax brackets change when people's earnings increase or decrease. With an increase in earnings one moves to a higher tax bracket, while a decrease in earnings moves one to a lower bracket. Okumanızı öneririz Küçük İşletmeler için 2023 e-Ticaret Rehberi ### What Are Tax Brackets Based On? Tax brackets are always determined by the earnings of the individual or institution. This is a rate calculated on total income earned over the year and determines the person's tax obligations. ### What Is the Disability Tax Deduction? The disability tax deduction is an income tax deduction granted to individuals with a disability rate of 40% or above who have lost working capacity. To benefit from this deduction, the disability must be documented with a health report. Applications are made through e-devlet. ### Are Tax Bracket Amounts Calculated on Gross or Net Salary? Tax bracket calculations are made on gross salary. The amount remaining after deductions such as the SGK employee share and unemployment insurance premium are subtracted from gross salary forms the tax base, and the tax is calculated on this base. Tip Track Tax Refunds If you have overpaid tax, track your refunds and make the necessary applications. This lets you make the best use of your financial resources. ### When Do Civil Servants Enter a Tax Bracket? Civil servants start each January with a 15% income tax deduction from their salaries. With salary increases, civil servants can move into the 20% tax bracket during the year. ### What Happens If a Tax Debt Is Not Paid? If a tax debt is not paid, the debt is put into collection and a late penalty is applied. If payment is not made, interest begins to accrue on the debt. ### What Is a Tax Amnesty? A tax amnesty is the lifting of legal and administrative sanctions applied to individuals and businesses that have violated tax laws. In this way the state may waive some of its tax claims. ### How Is a Tax Refund Obtained? Taxpayers entitled to a tax refund must apply through the online tax office within 1 year. After the response to the tax refund request petition, the refund can be received. ## Frequently Asked Questions (FAQ) **What Is a Tax Bracket?** A tax bracket is one of the rates used in calculating income tax, which vary according to the amount of income. As your earnings increase, you move into a higher tax bracket. **How High Are the Tax Brackets in 2023?** In 2023, the tax brackets were set at 15%, 20%, 27%, 35% and 40% according to the amount of income. **What Is the Income Tax Base?** The income tax base is the net income that remains after certain deductions are made from gross income. This base forms the foundation of the tax calculation. **What Is the Disability Tax Deduction and Who Can Benefit?** The disability tax deduction is a tax reduction granted to people with a disability rate of 40% or higher. To benefit from this deduction, the condition must be documented with a health report. **What Happens If a Tax Debt Is Not Paid?** If a tax debt is not paid, the debt is placed under collection and late interest is added. This can negatively affect the taxpayer's financial situation. **What Is a Tax Refund and How Is It Obtained?** A tax refund is the process of paying back to the taxpayer tax that was overpaid. To request a refund, an application must be made through the online tax office. **When Does the Tax Bracket of Civil Servants Change?** Civil servants generally start the year in the 15% tax bracket and may move into higher brackets during the year depending on salary increases. **How Is Income Tax Calculated?** Income tax is calculated on the base that remains after deductions such as the employee's social security share and unemployment insurance are subtracted from gross income. This calculation varies according to the size of the income and the tax brackets. Faprika e-Commerce The way to succeed in the world of e-commerce is a strong and effective infrastructure. Faprika gives you all the tools you need to stay one step ahead in the industry. If you want to take a closer look at the advantages Faprika offers to make a difference in e-commerce, expand your customer base and increase your sales, start your free trial now. Start free with Faprika now. 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