The tax system plays a critical role in maintaining the economic balance of society and financing public services. Tax brackets, updated annually, determine the financial obligations of taxpayers. Among the most anticipated topics of the working population regarding the 2024 tax regulations are the 2024 tax brackets. In this article, we have summarized key topics such as income tax, tax brackets, and how tax brackets are calculated for you.
What is Income Tax?
Income tax is a type of tax regulated under the Income Tax Law No. 193, which individuals are required to pay to the state on the income they earn over a specific period. According to the law, elements subject to income tax include commercial profits, agricultural income, wages, professional earnings, income from real estate capital, income from movable capital, and other income and earnings. This tax is calculated based on the amount of income earned and is typically applied progressively; that is, as income increases, the rate of tax to be paid also increases. Income tax is implemented to finance public services, cover government expenditures, and ensure societal welfare.
What is a Tax Bracket?
A tax bracket refers to the income ranges set for a taxpayer's annual income, within which different tax rates are applied. In Turkey, income tax brackets are implemented progressively to ensure fair taxation of earnings. As income increases, the tax rate that must be paid also increases according to the income bracket. This system aims to maintain tax equity and to levy higher tax rates on those with higher incomes. The tax bracket system is an essential factor that taxpayers need to consider when planning their taxes. Knowing the income brackets allows for accurate financial planning and helps to avoid unexpected tax burdens.
When is Income Tax Paid?
Income tax is paid at specific intervals depending on the type of income of the taxpayer. For salaried employees, income tax deductions are generally made from their wages and are declared and paid by employers through the withholding tax and premium service declaration. Those who earn other types of income must submit an annual tax return and declare their income tax based on their earnings.
Income Tax Declaration Process
- Annual Tax Return: The income tax return is submitted from the beginning of March until the last day of March each year. In this return, all income earned in the previous year is declared.
- Payment Periods: The declared income tax is paid in two installments, in March and July.
2024 Tax Brackets
| Up to 110,000 TRY | 15% |
| For 230,000 TRY, 16,500 TRY for the first 110,000 TRY, and the excess | 20% |
| For 580,000 TRY, 40,500 TRY for the first 230,000 TRY (for wage income, 40,500 TRY for the first 870,000 TRY), and the excess | 27% |
| For 3,000,000 TRY, 135,000 TRY for the first 580,000 TRY (for wage income, 213,300 TRY for the first 870,000 TRY), and the excess | 35% |
| For amounts exceeding 3,000,000 TRY, 982,000 TRY for the first 3,000,000 TRY (for wage income, 958,800 TRY for the first 3,000,000 TRY), and the excess | 40% |
How is the Tax Bracket Calculated?
Tax bracket calculation is based on the taxpayer's total annual income. Accurate calculation of income brackets is crucial for properly managing tax obligations. This calculation is carried out through the following steps:
- Determining the Income: All income earned throughout the year is totaled to determine the annual gross income (e.g., salary, rental income, investment returns, and other earnings).
- Dividing the Income into Brackets: The total income is divided according to the tax brackets specified in the table above.
- Applying Tax Rates: The income falling within each bracket is multiplied by the corresponding tax rate to calculate the amount of tax payable for each bracket.
When does Tax Brackets Reset?
Tax brackets are determined based on the cumulative income calculated from the beginning of the year. As you exceed certain income levels during the year, you move into a higher tax bracket. However, when a new year begins, this cumulative income is reset, and your income is taxed again starting from the lowest tax bracket. Therefore, at the start of each year, the tax bracket is reset, and the income earned throughout the year is taxed according to the newly determined tax brackets.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.