Minimum Subsistence Allowance (AGI) is a tax deduction deducted from income tax annually for wage earners. It is regulated in Article 32 of the Income Tax Law No. 193.
Amendment after 2022
With the change in the law made in 2022, AGI was abolished and replaced with an income tax exemption for wages up to the minimum wage. This ensures that the minimum wage earner receives more net wage.
New Exemption System
- Wages up to the annual minimum wage exempt from income tax
- Exempt from stamp duty
- SGK premium is applied normally
AGI Old System (Before 2022)
- Single: 50%
- Spouse not working: +10%
- For each child: +7.5% (1-2 children), +10% (3 children)
Employer's Responsibility
The employer must manage the difference between the correct calculation of the wage earner and the gross-net wage. Incorrect calculation may have consequences against the employer.
Employee's Rights
In case of wrong exception, the employee can claim back the excess deducted amount from both the employer and the Ministry of Finance.
Tax/labor law lawyer is recommended.