In our bulletin published on 23 October 2025, we highlighted several key points regarding the proposed amendments to income tax and social security costs. The legislative amendment, adopted on 4 December 2025, was finally published in the Official Gazette dated 19 December 2025, thereby bringing into force the regulations affecting income tax and social security costs with minor adjustments on the draft.
Income tax
| Subject for the change | Current practice | Change as of 01.01.2025 |
| Eligibility for mortgage interest deduction from rental income | Deductible for all properties | Deductibility limited to non-residential properties as of 2025 |
The change to the income tax treatment of mortgage interest deductions will be effective as of 1 January 2025, which means that the exemption will not be applicable for the 2025 Turkish tax return.
Social security
| Subject for proposed change | Current rate/status | Change as of 01.01.2026 |
| Employer social security contribution rate | 20.75% | 21.75% |
| Social security ceiling (Equivalent to TRY 195,041.40 as of today.) | 7.5 × minimum wage | 9 × minimum wage |
| Social security premium rate for indebtment scheme application in various occasions | 32% | 45% |
| Voluntary insurance premium rate | 20% | 21% |
| Employer social security incentive rate for compliant employers | 4-point reduction | 2-point reduction |
Indebtment scheme is a specific type of voluntary social security application, where the applicant has the right to pay a lump sum premium payment for the period where he/she could not continue mandatory social security registration under conditions set forth by the law—such as maternity leave, military service, strike etc. Indebtment scheme is also applicable for the period where the individual worked in a foreign country without a Turkish Social Security registration. Specific for such individuals who worked in a foreign country, the premium rate was already increased to 45% back in 2019. The draft law intends to make a similar increase for other occasions.
The social security changes outlined above will be effective as of 1 January 2026.
As the draft law is accepted with above amendments, the changes to social security law will notably increase employers’ overall employment costs. From a global work perspective, many Turkish employers tend to maintain their outbound employees’ social security levels in the social security ceiling. An increase in the cap will automatically raise these costs by approximately 20%, which should be reflected in their cost projections.
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Cumhur Dülger
Partner
Erkan Bulut
Senior Consultant
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