Israel has 7 progressive brackets from 10% to 50%, with the 50% top rate kicking in at just ILS 721,560 (~$195,000 USD) — technically a 47% top ordinary bracket plus a 3% "Mas Yesef" high-income surtax above that threshold. Bituach Leumi (National Insurance + Health Tax) adds a two-tier ~4.3%/~12.2% for employees. But Israel offers a powerful incentive: new olim (immigrants) receive a 10-year tax holiday on foreign income and assets—making aliyah financially attractive. A ILS 300,000 earner (~$81,000) pays roughly ILS 57,300 income tax (~19%) plus ILS 29,200 Bituach Leumi. Capital gains are taxed at 25-30%. The high-tech sector benefits from special R&D incentives. Self-employed pay higher Bituach Leumi rates (~17%). Filing deadline is April 30. Use our calculator to estimate your Israeli tax liability.
Note: These are marginal rates — you only pay the higher rate on income within each bracket.
Source: Israel Tax Authority
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Israel has 7 brackets (Mas Hachnasa): 10% on ILS 0-84,120, 14% on ILS 84,120-120,720, 20% on ILS 120,720-228,000, 31% on ILS 228,000-301,200, 35% on ILS 301,200-560,280, 47% on ILS 560,280-721,560, and 50% above ILS 721,560 (the last step is technically the 47% ordinary top bracket plus a separate 3% Mas Yesef high-income surtax). The 50% top rate is relatively high internationally.
Bituach Leumi (National Insurance Institute) provides social security, health, unemployment, and other benefits, and is collected together with Health Tax (Mas Briut) as a single combined employee deduction. Employees pay a reduced combined rate of 4.27% on income up to ILS 7,703/month (~ILS 92,436/year), then 12.17% on income above that up to the contribution ceiling of ILS 51,910/month (~ILS 622,920/year). Employers add a separate two-tier contribution (~4.5%/~3.1%). Self-employed pay ~17% combined. Benefits include maternity, disability, and retirement.
New immigrants (olim) receive extraordinary tax benefits: 10-year exemption on foreign-source income (interest, dividends, rental, pensions), 10-year exemption on foreign capital gains, no reporting requirement for foreign assets. This makes aliyah attractive for wealthy individuals. Benefits apply from the date of aliyah, regardless of previous visits.
Capital gains on securities and other assets are taxed at 25% for individuals (30% for 'substantial shareholders' with 10%+ ownership). Real estate gains face complex calculations including inflation adjustments. The 25% rate is relatively favorable compared to income tax rates. Foreign residents may qualify for exemptions under tax treaties.
Israel offers significant R&D incentives: Preferred Enterprise regime offers 16% corporate tax (7.5% in development areas) vs 23% standard. IP regime allows 6% tax on qualifying IP income. R&D grants from the Innovation Authority. These incentives helped build Israel's 'Startup Nation' reputation. Individual employees benefit from stock option tax deferrals.
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Last Updated: August 2026