Tax laws Israel
Israel's tax system encompasses various components, including personal income tax, corporate tax, value-added tax (VAT), and national insurance contributions. Below is an overview of these key elements:
Personal Income Tax:
Israel employs a progressive income tax system with rates increasing based on income levels. As of 2024, the tax brackets are structured as follows:
- Up to NIS 84,120: 10%
- NIS 84,121 – NIS 120,720: 14%
- NIS 120,721 – NIS 193,800: 20%
- NIS 193,801 – NIS 269,280: 31%
- NIS 269,281 – NIS 560,280: 35%
- NIS 560,281 – NIS 721,560: 47%
- Above NIS 721,560: 50%
These rates apply to residents on their worldwide income and to non-residents on income sourced within Israel.
Corporate Tax:
The standard corporate tax rate in Israel is 23%, applicable to both resident and non-resident companies on income accrued or derived within the country.
Value-Added Tax (VAT):
VAT is levied on most goods and services in Israel. As of October 1, 2015, the standard VAT rate was set at 17%. However, in response to increased military spending and a rising budget deficit, the Israeli cabinet approved a budget in November 2024 that includes raising the VAT rate from 17% to 18%.
National Insurance (Social Security):
National insurance contributions, which fund social welfare benefits, are mandatory for both employers and employees. As of January 2020, the contribution rates are as follows:
Employees:
- Up to NIS 6,331 monthly salary: 3.50%
- NIS 6,331 – NIS 44,020 monthly salary: 12.00%
Employers:
- Up to NIS 6,331 monthly salary: 3.55%
- NIS 6,331 – NIS 44,020 monthly salary: 7.60%
Self-employed individuals contribute between 9.82% and 16.23%, depending on their income level.
Recent Developments:
In light of the ongoing conflict and its economic repercussions, the Israeli government has implemented measures to address the growing budget deficit. The 2025 state budget includes significant tax increases and spending cuts, notably raising the VAT rate to 18% and reducing expenditures across various ministries.
For the most current and detailed information on Israel's tax laws, it is advisable to consult the Israeli Tax Authority or seek professional tax advice.
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