Question 1

What are the Israeli income tax brackets for 2025?

Accepted Answer

Monthly income tax brackets in Israel are: 10% on income up to ₪7,010; 14% from ₪7,011 to ₪10,060; 20% from ₪10,061 to ₪16,150; 31% from ₪16,151 to ₪22,440; 35% from ₪22,441 to ₪46,690; 47% from ₪46,691 to ₪60,130; and 50% (including 3% surtax / Mas Yesef) on monthly income above ₪60,130.

Question 2

What are tax credit points (נקודות זיכוי) and what are they worth?

Accepted Answer

Tax credit points directly reduce calculated income tax. For 2025, each point is worth ₪242 per month (₪2,904 per year). Every Israeli resident receives a base of 2.25 points (₪544.50/mo), resident women receive 2.75 points (₪665.50/mo), with additional points for dependent children, new immigrants, and single parents.

Question 3

How much does an employee pay for Bituach Leumi and Health Insurance?

Accepted Answer

Employees pay a reduced rate of 3.50% (0.40% National Insurance + 3.10% Health Insurance) on gross salary up to ₪7,522 per month (60% of average wage). Above ₪7,522 up to the maximum ceiling of ₪49,030 per month, the regular rate is 12.00% (7.00% National Insurance + 5.00% Health Insurance).

Question 4

What is the mandatory employee pension contribution?

Accepted Answer

Under the mandatory pension expansion order, the employee contributes 6.0% of gross pensionable salary, while the employer contributes 6.5% for pension and 6.0% or 8.33% for severance pay.

Question 5

What is Keren Hishtalmut (Advanced Study Fund)?

Accepted Answer

Keren Hishtalmut is a popular tax-advantaged savings scheme. Typically, the employee contributes 2.5% and the employer contributes 7.5% of salary up to the statutory ceiling of ₪15,712 per month. All capital gains are completely exempt from tax after 6 years.

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