Take-home pay in Israel: gross, net and the credit points
Guide · Tax
Take-home pay in Israel: gross, net and the credit points
The gap between the salary you negotiate and the money that arrives can be anywhere from ten to fifty per cent. Understanding four things — the brackets, the credit points, national insurance and the pension — explains almost all of it, and olim get a large and time-limited advantage in one of them.
The brackets
Israeli income tax is progressive and computed monthly, then reconciled annually. For 2026 the monthly bands run 10 per cent on the first ₪7,010, 14 per cent to ₪10,060, 20 per cent to ₪16,150, then 31 per cent, with higher bands above and a surtax on very high incomes. The brackets are updated each year, and the Tax Authority's annual deductions booklet is the authoritative source.
They stack, as they do everywhere. Your marginal rate is not your average rate, and the number people quote in conversation is almost always the marginal one.
Credit points — the part that is worth real money
Nekudot zikui are subtracted from the tax itself, not from taxable income. In 2026 each point is worth ₪242 a month, ₪2,904 a year. Every Israeli resident receives a base allocation of 2.25 points, and women receive 2.75.
Points are not applied automatically. Your employer applies what he has on file. A new child, a completed degree or your oleh status not reaching payroll means you overpay every month. File Form 101 accurately at the start of employment, update it, and reclaim overpaid tax at year end — refunds can be claimed retrospectively.
National insurance and health tax
Bituach Leumi and the health tax are deducted alongside income tax. Rates are banded, with a reduced rate on income below a threshold and a higher rate above it; together they reach roughly 12 per cent on the upper band, and they stop at a monthly ceiling. Employers contribute separately.
What you buy with it is substantial and worth knowing: health coverage through your chosen kupat cholim, maternity pay, unemployment, disability, reserve-duty compensation and old-age pension.
The pension, which is compulsory
Since 2008 pension provision is mandatory for employees. Minimum contributions total 18.5 per cent of gross salary — broadly 6 per cent from the employee, 6.5 per cent from the employer towards pension and 6 per cent from the employer towards severance. It appears on your payslip as a deduction and it is not optional.
Many employers also offer a keren hishtalmut, a tax-advantaged medium-term savings fund. Where it is offered, take it; it is one of the few genuinely efficient savings vehicles available to an Israeli employee.
The oleh exemptions on foreign income — and the 2026 change
New olim and senior returning residents receive a ten-year exemption from Israeli tax on foreign-source income and capital gains under section 14 of the Income Tax Ordinance. That exemption stands.
The reporting exemption has been withdrawn for new arrivals. The separate exemption from reporting foreign income applies only to those who became Israeli residents before 1 January 2026. Anyone becoming resident after 31 December 2025 must report foreign-source income during the ten-year period, even where it remains exempt from tax. If you are planning a move now, budget for Israeli tax filing from year one.
Separately, a new incentive exempts employment and business income from personal exertion earned in Israel, up to annual ceilings, for new immigrants and senior returning residents becoming Israeli tax resident within a defined window opening in November 2025 — with a lower ceiling where the income comes from a relative. It is new, conditional and generous enough to be worth a specific conversation with an Israeli accountant rather than a paragraph on a website.
Reading an Israeli payslip line by line
The tlush maskoret, translated — brackets, points, Bituach Leumi and the pension.
Nothing on this page is legal, tax or financial advice.
Questions we get asked
How much is a credit point worth?
₪242 per month in 2026, or ₪2,904 a year, taken directly off the tax due rather than off taxable income.
How long do the oleh credit points last?
Three points for the first eighteen months, two for the following year, one for the third — three and a half years in total.
Do I still have to file if my foreign income is exempt?
If you became Israeli resident from 1 January 2026 onwards, yes — the reporting exemption was withdrawn for new arrivals even though the ten-year tax exemption remains. Take advice on your own dates.
Can I claim back overpaid tax?
Yes. Israeli tax is calculated annually but deducted monthly, so anyone who did not work a full twelve months, or whose credit points were not correctly applied, has probably overpaid and can reclaim it.
Is the pension deduction avoidable?
No — pension provision has been mandatory for employees since 2008, at minimum total contributions of 18.5 per cent of gross salary.
Net income sets the mortgage, and the mortgage sets the apartment
Israeli lenders underwrite on net repayment capacity. Work the payslip out first, then the borrowing ceiling, then the shortlist.
This is general information, not legal, tax or financial advice. Israeli tax rules changed materially for people becoming resident from 1 January 2026, and figures are revised annually. Take advice from an Israeli accountant on your own position before you act, and confirm current thresholds with the Israel Tax Authority.
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