How income tax works in Israel
Israel taxes residents on worldwide income. Residence turns on centre of life — home, family, work and ties — with rebuttable presumptions at 183 days or 30 days plus 425 across three years.
Brackets in 2026 run 10% to ILS 84,120, 14% to ILS 120,720, 20% to ILS 228,000, 31% to ILS 301,200, 35% to ILS 560,280, 47% to ILS 721,560 and 50% above including the 3% surtax. Every resident gets 2.25 credit points worth about ILS 6,534 off the bill.
National insurance and health add 4.27% on low slices and 12.17% above ILS 7,703 monthly to a high ceiling. Employers withhold monthly and the assessment settles credits and deductions.
Income tax brackets in Israel
| Bracket | Rate | Notes |
|---|---|---|
| Up to ILS 84,120 | 10% | Before credit points and social charges |
| ILS 84,121 to ILS 120,720 | 14% | Before credit points and social charges |
| ILS 120,721 to ILS 228,000 | 20% | Before credit points and social charges |
| ILS 228,001 to ILS 301,200 | 31% | Before credit points and social charges |
| ILS 301,201 to ILS 560,280 | 35% | Before credit points and social charges |
| ILS 560,281 to ILS 721,560 | 47% | Before credit points and social charges |
| ILS 721,561 and above | 50% | Includes 3% surtax, before social charges |
Tax rates at a glance
- Entry rate
- 10%To ILS 84,120
- Middle rate
- 31% / 35%
- Upper rate
- 47%
- Top rate
- 50%
- Social ceiling
- ILS 51,910
- Credit value
- ILS 2,904
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
EmployeesExpatsContractorsHigh earnersCross-border workers
Watch out for
- Middle-band thresholds differ between sources. The 2026 CPI notice moves lines yearly, so confirm any calculator's vintage before trusting 20% to 35% cutoffs.
- Credit points phase nothing out but do not touch social charges. Low earners can zero income tax while still paying full insurance and health.
- Newcomers from 2026 must file and disclose worldwide holdings even where exempt. The old report-nothing holiday survives only for earlier arrivals.
- Exit tax deems a disposal at fair value on departure. Leavers need valuation and deferral planning before the centre of life moves.
Frequently asked questions
Do expats pay income tax in Israel?
Yes, if resident or earning Israeli income. Residents pay on worldwide income, while new immigrants enjoy a 10-year foreign-income exemption with filing duties.
What is the top income tax rate in Israel?
50% above ILS 721,560 including the 3% surtax, before national insurance and health of up to 12.17%.
How do credit points work?
Each point subtracts ILS 2,904 yearly from computed tax. Every resident gets 2.25 points, with extras for women, children, soldiers and newcomers.
Is salary taxed differently from capital income?
Yes. Salary follows the seven brackets plus social charges, while dividends, gains and rent pay 25% or 30% with an extra 2% surtax at the top.