| TAX CIRCULAR: 2026-98 | DATE: 09.07.2026 |
In accordance with the updates made in civil servant salary coefficients by the Circular No. 5 dated 02.07.2026 of the General Directorate of Public Financial Management and Transformation of the Ministry of Treasury and Finance, the severance pay ceiling that will be valid for the period between July 1, 2026, and December 31, 2026, has been redetermined.
Within this scope;
Severance Pay Ceiling: The annual ceiling amount of the severance pay to be paid to employees whose employment contract is terminated or who retire as of July 1, 2026, which will be exempt from income tax, has become 73,729.87 TL.
Taxation and Expensing Process
Taxation: If the severance pay amount paid to the employee does not exceed this determined ceiling amount (73,729.87 TL), it is completely exempt from income tax. For payments exceeding the ceiling, the exceeding part will be considered as a “wage” and subjected to income tax. Only a stamp tax deduction at the rate of 0.759% is made from the tax-exempt severance pay.
Expensing Process (Accrual vs. Payment): According to the opinion stated in the rulings of the Ministry of Finance; for the severance pay to be recorded as an expense in the determination of corporate income, it is not enough for the worker to be entitled to it. Even if it has accrued, the earned severance pay must be actually paid to the worker. The expense record can be made in the period when the payment is made.
