Skip to content 
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.
Simulate Israeli tax for an Ossek Mourche / Ossek Patour
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 tax credits 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:
- Active income", which comes from the taxpayer's own work (יגיעה אישית), such as a monthly salary.
- 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 tranches for 2023
Annual income (in shekels) | Tax rates | Tax levels | Accumulated taxes |
| 0 - 81,480 | 10% | 8,148 | 8,148 |
| 81,481 - 116,760 | 14% | 4,939 | 13,087 |
| 116,761 - 187,440 | 20% | 14,136 | 27,223 |
| 187,441 - 260,520 | 31% | 22,654 | 49,877 |
| 260,521 - 542,160 | 35% | 98,573 | 148,450 |
| 542,161 - 698,280 | 47% | 73,375 | 221,825 |
| 698,281 and over | 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%.
Here are the brackets for 2022
Annual income (in shekels) | Tax rates | Tax levels | Accumulated taxes |
| 0 - 77,400 | 10% | 7,740 | 7,740 |
| 77,401 - 110,880 | 14% | 4,687 | 12,427 |
| 110,881 - 178,080 | 20% | 13,440 | 25,867 |
| 178,081 - 247,440 | 31% | 21,501 | 47,368 |
| 247,441 - 514,920 | 35% | 93,618 | 140,986 |
| 514,921 - 663,240 | 47% | 69,711 | 210,697 |
| 663,241 and more | 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%.
Here are the tranches for 2021
Annual income (in shekels) | Tax rates | Tax levels | Accumulated taxes |
| 0 - 75,480 | 10% | 7,548 | 7,548 |
| 75,481 - 108,360 | 14% | 4,603 | 12,151 |
| 108,361 - 173,880 | 20% | 13,104 | 25,255 |
| 173,881 - 241,680 | 31% | 21,018 | 46,273 |
| 241,681 - 502,920 | 35% | 91,434 | 137,706 |
| 502,921 - 647,640 | 47% | 68,018 | 205,724 |
| 647,641 and over | 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%.
Here are the brackets for 2020
Annual income (in Shekels) | Rates taxation | Tax levels | Accumulated taxes |
| 0 - 75,960 | 10% | 7,596 | 7,596 |
| 75,961 - 108,960 | 14% | 4,620 | 12,216 |
| 108,961 - 174,960 | 20% | 13,200 | 25,416 |
| 174,961 - 243,120 | 31% | 21,129 | 46,545 |
| 243,121 - 505,920 | 35% | 91,980 | 138,525 |
| 505,921 - 651,600 | 47% | 68,469 | 206,994 |
| 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 tranches for 2023
Annual income (in shekels) | Tax rates | Tax levels | Accumulated taxes |
| 0 - 260,520 | 31% | 80,761 | 80,761 |
| 260,521 - 542,160 | 35% | 98,573 | 179,335 |
| 542,161 - 698,280 | 47% | 73,374 | 252,710 |
| 698,281 and over | 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%.
Here are the brackets for 2022
Annual income (in shekels) | Tax rates | Tax levels | Accumulated taxes |
| 0 - 247,440 | 31% | 76,706 | 76,706 |
| 247,441 - 514,920 | 35% | 93,618 | 170,324 |
| 514,921 - 663,240 | 47% | 69,711 | 240,035 |
| 663,241 and more | 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%.
Here are the tranches for 2021
Annual income (in shekels) | Tax rates | Tax levels | Accumulated taxes |
| 0 - 241,680 | 31% | 74,921 | 74,921 |
| 241,681 - 502,920 | 35% | 91,434 | 166,355 |
| 502,921 - 647,640 | 47% | 68,018 | 234,373 |
| 647,641 and over | 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%.
Here are the brackets for 2020
Annual income (in Shekels) | Rates taxation | Tax levels | Accumulated taxes |
| 0 - 243,120 | 31% | 75,367 | 75,367 |
| 243,121 - 505,920 | 35% | 91,980 | 167,347 |
| 505,921 - 651,600 | 47% | 68,469 | 235,817 |
| 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.
