Income Tax (Mas Hachnasa)

Working Olim are entitled to a reduction in their Israeli income tax in the three and a half years following their Aliyah.

Note: After this period, Olim will pay the same income tax as veteran Israelis

Olim receive reductions:

  • For the first 18 months – 3 additional credit points (reduction of NIS 654 per month or NIS 7848 annually)
  • For the following 12 months – 2 additional credit points (reduction of NIS 436 per month or 5232 annually)
  • For the following 12 months – 1 additional credit points (reduction of NIS 218 per month or NIS 2616 annually)

This benefit may be extended whilst carrying out compulsory army service and whilst studying at university or college.

Additional reductions are available for parents of young children, working mothers, discharged soldiers and many other reasons.

Apply for this benefit by filling out the relevant sections of form 101 (filled out upon start of employment and at the beginning of every year).

Income Tax bands from work income (updated 1/1/2014)
 
MONTHLY INCOME YEARLY INCOME MARGINAL TAX RATE
₪ 0 – 5,280 ₪ 0 – 63,360 10%
₪ 5,281 – 9,010 ₪ 63,361 – 108,120 14%
₪ 9,011 – 14,000 ₪ 108,121 – 168,000 21%
₪ 14,001 – 20,000 ₪ 168,001 – 240,000 31%
₪ 20,001 – 41,830 ₪ 240,001 – 501,960 34 %
Each additional shekel Each additional shekel 48%