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How much tax do I have to pay?

Impot en Israel Cabinet Expert Comptable Dray & Dray

The progressive method

Income tax in Israel is defined by the so-called "progressive tax" method.

The progressive method means that the more money a person earns, the higher their tax liability will be.

As you can see from the table below, your tax rate increases as your net taxable income rises.
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Tax simulator for an employee in Israel

How to calculate net taxable income

To calculate your net taxable income, you need to take into account all the income you have earned in the past year, and deduct from this income any exempt income, your tax losses from the current or previous years, and certain deductions allowed by the Israeli tax code.

Tax brackets

Once we have obtained your net taxable income, it will be divided into different levels. Each level will be subject to a different tax percentage (see table below).

These tiers are called "tax brackets" and are updated each year by the tax authorities. Israeli government.

ALSO READ: Understanding how tax credits work in Israel

Where does your money come from?

Your tax threshold will differ depending on where your money comes from.

The Israeli government has divided the source of revenue into 2 distinct categories:

  1. Active income", which comes from the taxpayer's own work (יגיעה אישית), such as a monthly salary.
  2. Passive income", which does not come from the taxpayer's own work, such as monthly rent.

Each of these sources benefits from different tax brackets and levels, as shown in the tables below:

Tax bracket for active income :

Here are the brackets for 2024

Annual income 

(in shekels)

Tax ratesTax levelsAccumulated taxes
0 - 84,12010%8,4128,412
84,121 - 120,72014%5,12413,536
120,721 - 193,80020%14,61628,152
193,801 - 269,28031%23,39851,550
269,281 - 560,28035%101,850153,400
560,281 - 721,56047%75,801229,201
721,561 and over50%  

* Passive income (rent, interest, dividends, capital gains, etc.) from an individual under 60 is not eligible for the tax rate in Israel of less than 31%.

Here are the tranches for 2023

Annual income 

(in shekels)

Tax ratesTax levelsAccumulated taxes
0 - 81,48010%8,1488,148
81,481 - 116,76014%4,93913,087
116,761 - 187,44020%14,13627,223
187,441 - 260,52031%22,65449,877
260,521 - 542,16035%98,573148,450
542,161 - 698,28047%73,375221,825
698,281 and over50%  

* Passive income (rent, interest, dividends, capital gains, etc.) from an individual under 60 is not eligible for the tax rate in Israel of less than 31%.

Here are the brackets for 2022

Annual income 

(in shekels)

Tax ratesTax levelsAccumulated taxes
0 - 77,40010%7,7407,740
77,401 - 110,88014%4,68712,427
110,881 - 178,08020%13,44025,867
178,081 - 247,44031%21,50147,368
247,441 - 514,92035%93,618140,986
514,921 - 663,24047%69,711210,697
663,241 and more50%  

* Passive income (rent, interest, dividends, capital gains, etc.) from an individual under 60 is not eligible for the tax rate in Israel of less than 31%.

Here are the tranches for 2021

Annual income 

(in shekels)

Tax ratesTax levelsAccumulated taxes
0 - 75,48010%7,5487,548
75,481 - 108,36014%4,60312,151
108,361 - 173,88020%13,10425,255
173,881 - 241,68031%21,01846,273
241,681 - 502,92035%91,434137,706
502,921 - 647,64047%68,018205,724
647,641 and over50%  

* Passive income (rent, interest, dividends, capital gains, etc.) from an individual under 60 is not eligible for the tax rate in Israel of less than 31%.

Here are the brackets for 2020

Annual income 

(in Shekels)

Rates 

taxation

Tax levels Accumulated taxes
0 - 75,96010%7,5967,596
75,961 - 108,96014%4,62012,216
108,961 - 174,96020%13,20025,416
174,961 - 243,12031%21,12946,545
243,121 - 505,92035%91,980138,525
505,921 - 651,60047%68,469206,994
651,601 +50%  

* Passive income (rent, interest, dividends, capital gains, etc.) for an individual under 60 is not eligible for the tax rate in Israel of less than 31%...

Tax bracket for passive income :

Here are the brackets for 2024

Annual income 

(in shekels)

Tax ratesTax levelsAccumulated taxes
    
0 - 269,28031%83,47783,477
269,281 - 560,28035%101,850185,326
560,281 - 721,56047%75,801261,128
721,561 and over50%  

* Passive income (rent, interest, dividends, capital gains, etc.) from an individual under 60 is not eligible for the tax rate in Israel of less than 31%.

Here are the tranches for 2023

Annual income 

(in shekels)

Tax ratesTax levelsAccumulated taxes
    
0 - 260,52031%80,76180,761
260,521 - 542,16035%98,573179,335
542,161 - 698,28047%73,374252,710
698,281 and over50%  

* Passive income (rent, interest, dividends, capital gains, etc.) from an individual under 60 is not eligible for the tax rate in Israel of less than 31%.

Here are the brackets for 2022

Annual income 

(in shekels)

Tax ratesTax levelsAccumulated taxes
    
0 - 247,44031%76,70676,706
247,441 - 514,92035%93,618170,324
514,921 - 663,24047%69,711240,035
663,241 and more50%  

* Passive income (rent, interest, dividends, capital gains, etc.) from an individual under 60 is not eligible for the tax rate in Israel of less than 31%.

Here are the tranches for 2021

Annual income 

(in shekels)

Tax ratesTax levelsAccumulated taxes
    
0 - 241,68031%74,92174,921
241,681 - 502,92035%91,434166,355
502,921 - 647,64047%68,018234,373
647,641 and over50%  

* Passive income (rent, interest, dividends, capital gains, etc.) from an individual under 60 is not eligible for the tax rate in Israel of less than 31%.

Here are the brackets for 2020

Annual income 

(in Shekels)

Rates 

taxation

Tax levels Accumulated taxes
    
0 - 243,12031%75,36775,367
243,121 - 505,92035%91,980167,347
505,921 - 651,60047%68,469235,817
651,601 +50%  

* Passive income (rent, interest, dividends, capital gains, etc.) from an individual under 60 is not eligible for the tax rate in Israel of less than 31%.

Did you know?

It is important to note, however, that for a person over 60, the tax brackets for passive income will be the same as for active income.
An advantage for seniors.

In a nutshell:

Tax in Israel is progressive and is divided into 2 categories: assets and liabilities.

Don't hesitate to contact us to find out more about taxation in Israel.

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Boruch Levenson - CPA

A native English speaker qualified in both Israel and the UK, Boruch cares for the English speaking clients.

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Our consultants in Jerusalem

English speaking accountants in Israel
Address: Kanfei Nesharim 68. Merkaz Oranim
Phone number: 02 631 9000
Fax: 02 631 9005
Email: office@cpa-dray.com