7 tax brackets from 10% to 50%
Israel's hidden benefit: new olim (immigrants) get 10-year tax holiday on foreign income and assets. But rates are high: 50% kicks in at ~$195,000 USD. A ILS 300,000 earner pays ~20% income tax plus ~7.5% Bituach Leumi. Capital gains: 25-30%. High-tech R&D incentives available. Self-employed Bituach Leumi: ~17%.
Israel has 7 progressive brackets from 10% to 50%, with the 50% top rate kicking in at just ILS 721,560 (~$195,000 USD). Bituach Leumi (National Insurance) adds ~7.5% 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 60,000 income tax (~20%) plus ILS 22,500 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.
| Taxable Income | Tax Rate |
|---|---|
| ₪0 - ₪84,120 | 10% |
| ₪84,120 - ₪120,720 | 14% |
| ₪120,720 - ₪193,800 | 20% |
| ₪193,800 - ₪269,280 | 31% |
| ₪269,280 - ₪560,280 | 35% |
| ₪560,280 - ₪721,560 | 47% |
| Over ₪721,560 | 50% |
Note: These are marginal rates - you only pay the higher rate on income within each bracket.
Source: Israel Tax Authority
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Get Paid as a Contractor →Israel has 7 brackets (Mas Hachnasa): 10% on ILS 0-84,120, 14% on ILS 84,120-120,720, 20% on ILS 120,720-193,800, 31% on ILS 193,800-269,280, 35% on ILS 269,280-560,280, 47% on ILS 560,280-721,560, and 50% above ILS 721,560. The 50% top rate is relatively high internationally.
Bituach Leumi (National Insurance Institute) provides social security, health, unemployment, and other benefits. Employees pay reduced rate of ~3.5% on income up to ~ILS 7,000/month, then ~7% on income above that (average ~7.5% total). Employers add ~7.5%. 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.
Last Updated: March 2026