The aim of this paper is first to find out the income sources of the improvement in income inequality in the reform period between 2002 and 2007. Second, we aim to assess the distributional impacts of macroeconomic policies in the 2002-2007 reform period by examining the contributions of different income groups into overall inequality. Income data obtained from Household Budget Surveys of TurkStat covering the 2002-2013 period is used. The results show that there has been significant improvement in income distribution after 2002. The extent of this improvement seems to have been evidently higher in the 2002-2007 reform period than the rest of the period after 2007. Entrepreneurial and financial income groups were the most distinctive income groups in this improvement. The results also indicate that the contributions of transfer payments into improvement was very small, but surprisingly positive in both the 2002-2007 and 2007-2009 periods, and expectedly negative in the 2009-2013 period.