Taxation in Israel
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Taxation in Israel include income tax, capital gains tax, value-added tax and land appreciation tax. The primary law on income taxes in Israel is codified in the Income Tax Ordinance. There are also special tax incentives for new immigrants to encourage aliyah.
Following Israel’s social justice protests in July 2011, Prime Minister Benjamin Netanyahu created the Trajtenberg Committee to hold discussions and make recommendations to the government's socio-economic cabinet, headed by Finance Minister Yuval Steinitz. During December 2011 the Knesset reviewed these recommendations and approved a series of amendments to Israel's tax law. Among the amendments were the raising of the corporate tax rate from 24% to 25% and possibly 26% in 2013. Additionally, a new top income bracket of 48% (instead of 45%) would be introduced for people earning more than NIS 489,480 per annum. People who earn more than NIS 1 million a year would pay a surtax of 2% on their income and taxation of capital gains would not be decreased to 20% but remain at 25% in 2012.
Filing status
Israeli residents are taxed on their worldwide income, while non-residents are taxed only on their Israeli-sourced income.[1] Income includes employment and business income, and passive income from bank deposits and savings.[2]
An individual is deemed to be resident if they spend 183 days or more in Israel during the current tax year, or 30 days or more in Israel during the current tax year and 425 days or more during the current tax year and the preceding two years.[2]
A single person files a single assessment, while a married couple normally files a joint assessment, but may opt out if the need arises.[2]
A year for tax purposes for individuals is a calendar year and must file their annual tax returns by the 30 April of the following year.[3]
Tax rates
The basic rates of income tax are as follows (according to the Israeli Tax Authority). Taxes are charged based on annual income; salaries in Israel are usually discussed at the monthly rate so these are included for convenience.
| Annual income level (NIS) | Monthly income level (NIS) | 2024 tax rate[4] |
|---|---|---|
| 0 – 84,120 | 0 - 7,010 | 10% |
| 84,121 – 120,720 | 7,011 - 10,060 | 14% |
| 120,721 – 193,800 | 10,061 - 16,150 | 20% |
| 193,801 – 269,280 | 16,151 - 22,440 | 31% |
| 269,281 – 560,280 | 22,441 - 46,690 | 35% |
| 560,281 - 721,560 | 46,691 - 60,130 | 47% |
| over 721,560 | over 60,130 | 50% |
| Other income sources | 2014 tax rate |
|---|---|
| Capital gains[1] | 25-32% |
| Interest[1] | 25-32% |
| Dividends[1] | 25-32% |
| Inheritance[5] | None |
Corporate tax
Filing status
A corporation is deemed to be subject to Israeli taxes if its activities are managed and controlled within the State of Israel or established under its laws.[6] A domestic corporation is subject to taxation on its worldwide income. A foreign corporation with an Israeli subsidiary is only taxed on income derived from, accrued or received in Israel, while a non-resident company without a subsidiary is only taxed on income sourced in Israel.[6]
A year for tax purposes is a calendar year, however businesses may request a different schedule. Businesses must file their annual tax returns five months after the end of their year.[3]
Tax rates
The corporate tax rate in Israel was 25% as of January 1, 2016,[7] decreased to 24% on January 1, 2017, and to 23% on January 1, 2018.[8]
Value-added tax
Value-added tax (VAT) in Israel, is applied to most goods and services, including imported goods and services. From 1 January 2025 the standard rate was increased to 18% from 17% [9] it had been decreased to 17% from 18% on 1 October 2015[10][11] It had been raised from 16% to 17% on 1 September 2012,[12] and to 18% on 2 June 2013.[13]
Certain items, such as exported goods and the provision of certain services to non-residents are zero-rated. VAT on imported goods is levied on value plus customs duty, purchase tax and other levies.[14][15]
Multinational companies that provide services to Israel through the Internet, such as Google and Facebook, must pay VAT.[16]
Electronic filing of VAT is mandatory.[17]
National insurance (Social Security)
Current rates of national insurance for employees, including health insurance and Bituah Leumi contributions (as of January 2020, in NIS)[18]
| up to 6,331 monthly salary | 6,331–44,020 monthly salary | ||
|---|---|---|---|
| Employee's share | 3.50% | 12.00% | |
| Employer's share | 3.55% | 7.60% | [19] |
Additionally self-employed individuals pay between 9.82% and 16.23%.[18]
Stamp duty
Historically, Israel had a stamp duty on signed documents.[20] Documents and duties were regulated by the 1961 "Stamp Tax on Documents" (Law 5731-1961),[21] the 1965 "Stamp Tax on Documents Regulations",[20] and subsequent Additions.[20] Documents below a certain value could be self-stamped at a postal-bank; in 2004, this threshold value was raised from 62,500 NIS to 125,000 NIS.[20] As of 2006 this tax is no longer collected.[22]
Israel has no other stamp-based taxes.[23]
