Income Tax in Israel

 

 Individual Income Tax in Israel

  • Income tax is to be paid in advances to the income tax during the fiscal year. The balance of which will be netted against taxes due upon submission of the audited financial statements on April 30 of the following year. If no profit is anticipated, the advances can be voided.
  • Taxes on salaries are imposed on the personal level and are to be deducted from the employee in custody by the entity.
  • Salaries paid to employees is subject to income tax on the individuals in accordance to item 121 of the income tax ordinance as follows:
  • As for employees, annually due taxes are calculated on a monthly basis, an additional deduction of national and health insurance is to be shared by the employee and the employer at different rates based on the annual salary.
  • The employee is entitled to annual tax credit for every single point earned. Points earned are as follows:
  • For year 2015 the tax credit point is equal to NIS 2,616 annually or NIS 218 monthly
  • For year 2017 the tax credit point is equal to NIS 2,580 annually or NIS 215 monthly

 

Annual income In NIS

2007

 

Annual income In NIS

2008

Up to 51,240

10%

 

Up to 52,680

10%

From 51,240 to 91,200

21%

 

From 52,680 to 93,720

16%

From 91,200 to 136,920

29%

 

From 93,720 to 140,640

26%

From 136,920 to 196,560

35%

 

From 140,640 to 202,080

33%

From 196,560 to 432,240

36%

 

From 202,080 to 435,120

35%

From 423,240 onwards

48%

 

From 435,120 onwards

47%

 

Annual income In NIS

2009

 

Annual income In NIS

2010

Up to 55,080

10%

 

Up to 57,240

10%

From 55,080 to 97,920

15%

 

From 57,240 to 101,640

15%

From 97,920 to 147,000

23%

 

From 101,640 to 152,640

23%

From 147,000 to 211,200

30%

 

From 152,640 to 219,000

30%

From 211,200 to 454,680

34%

 

From 219,000 to 472,080

34%

From 454,680 onwards

46%

 

From 472,080 onwards

46%

 

Annual income In NIS

2011

 

Annual income In NIS

2012

Up to 60,840

10%

 

Up to 62,400

10%

From 60,840 to 103,920

14%

 

From 62,400 to 106,560

14%

From 103,920 to 168,840

23%

 

From 106,560 to 173,160

21%

From 168,840 to 254,880

30%

 

From 173,160 to 261,360

30%

From 254,880 to 482,760

33%

 

From 261,360 to 501,960

33%

From 482,760 onwards

45%

 

From 501,960 onwards

46%

 

Annual income In NIS

2013

 

Annual income In NIS

2014

Up to 63,360

10%

 

Up to 63,360

10%

From 63,360 to 108,120

14%

 

From 63,360 to 108,120

14%

From 108,120 to 168,000

21%

 

From 108,120 to 168,000

21%

From 168,000 to 240,000

31%

 

From 168,000 to 240,000

31%

From 240,000 to 501,960

34%

 

From 240,000 to 501,960

34%

From 501,960 to 811,560

48%

 

From 501,960 to 811,560

48%

From 801,560 onwards

50%

 

From 801,560 onwards

50%

 

Annual income In NIS

2015

 

Annual income In NIS

2016

Up to 63,240

10%

 

Up to 63,240

10%

From 63,241 to 108,000

14%

 

From 63,241 to 108,000

14%

From 108,001 to 167,880

21%

 

From 108,001 to 167,880

21%

From 167,881 to 239,760

31%

 

From 167,881 to 239,760

31%

From 239,761 to 501,480

34%

 

From 239,761 to 501,480

34%

From 501,480 to 810,720

48%

 

From 501,480 to 810,720

48%

From 810,721 onwards

50%

 

From 810,721 onwards

50%

 

Annual income In NIS

2017

Up to 74,640

10%

From 74,641 to 107,040

14%

From 107,041 to 171,840

20%

From 171,841 to 238,800

31%

From 238,801 to 496,920

35%

From 496,921 onwards

47%

 

Income Tax Credit Points

Type

Points

Residence 2
Every Child 1
Female 0.5
Transportation 0.25

 

The points system has multiple variations and is to be determined on an individual basis.

Year

2007

2008

2009

2010

2011

credit point equivalent

2,178

2,268

2,364

2,460

2,508

 

Year

2012

2013

2014

2015

2016

2017

credit point equivalent

2,580

2,616

2,616

2,616

2,592

2,580

 

The working mother is entitled to child points as follows:

1) During the year the child birth - 1 point

2) During year one- year five - 2 points

3) Starting from 6-17 years - 1 point

4) In the year the child reaches 18 years - 0.5 point

Starting from 01.01.2012, the working father is entitled to children points as follow:

1) During the year the child birth - 1 point

2) The following two years after child birth - 2 points

3) In the year, when the child reaches 3 years - 1 point

According to article 46 of tax law when contributing for registered public organization for at least NIS 190 annually, the taxpayer is entitled to tax credit equal to 35% of contribution.

 

Dividend Tax:


The dividend tax rate is 25% for shareholders that hold less than 10% in the company that pays dividends, and 30% for shareholders owns more than 10% in the company.

 

Rental Income:


Israeli rental income (residential only) of up to NIS 5,010 for 2017 per month is exempt from tax.Individual landlords are entitled to pay tax at the rate of 10% on their gross rental income from homes.

Interest income:

Interest income shall generally be subject to tax at a rate of 25%.

Tax filing and payment:

  • Income tax is to be paid as advances to the income tax during the fiscal year. The balance of which will be netted against taxes due upon submission of the audited financial statements on April 30 of the following year. If no profit is anticipated, the advances can be voided.
  • A commercial entity in Israel is subject to Israeli Tax laws imposed on the legal structure on its net income in accordance with item 126 ( a ) of the income tax ordinance as follows:
  • The corporate income tax rate will be reduced from current 26.5% to 25% starting January 1, 2016
  • The corporate income tax rate will be reduced from current 25% to 24% starting January 1, 2017 and to 23% starting January 1, 2018

Corporation Taxation:

 

Year

2011

2012

2013

2014

2015

2016

2017

2018

Tax rate

24%

25%

25%

26.50%

26.50%

25%

24%

23%

 

 

 Dividends received by an Israeli company from another Israeli company are tax-exempt if the dividends arise from income produced or accrued in Israel. Dividends received by an Israeli company from income produced or accrued abroad are taxed at a corporate rate of 25%.