Maximizing Your Tax Credits in Israel
Understanding tax credits in Israel can be daunting, but these credits can significantly reduce your tax burden. So, it’s really worthwhile to know how the system works. In 2024, Israel offers various tax credits that can help you save money. This guide will walk you through the key points to help you understand and utilize these credits effectively.
Tax credits are valuable tools that can directly reduce the amount of tax you owe. Unlike deductions, which reduce your taxable income, tax credits reduce your tax liability. Depending on your circumstances, your eligibility for more tax credits will grow. Several tax credits are available, particularly for residents, parents with young children, students who have completed degrees, and those with other special circumstances.
In 2024, each tax point is worth ILS 2,904. So, for every credit point applied, your tax bill will be reduced by ILS 2,904.
General Tax Credits for all Israeli residents
Every resident of Israel is entitled to tax credits that can significantly lower their tax bill. Each resident is entitled to 2.25 credit points. Women, however, receive an additional 0.5 point.
Credits for Parents with children
Parents in Israel can benefit from additional tax credits. For example, parents of children under 18 can receive additional points per child.
Age reached during the tax year | Credit points for the Mother (or the partner who receives child benefit payments) | Credit points for the father (or the partner who doesn’t receive child benefit payments) |
Year of birth | 2.5 | 2.5 |
Age 1 -2 | 4.5 | 4.5 |
Age 3 | 3.5 | 3.5 |
Age 4-5 | 2.5 | 2.5 |
Age 6-17 | 2 | 1 |
Age 18 | 0.5 | 0 |
Credits for Parents with children with disabilities
Parents of children with disabilities are eligible for two additional points, reflecting the additional responsibilities and costs associated with raising a child with special needs.
- They were diagnosed by a neurologist or child development specialist as having one of their legs paralyzed, or a doctor stated that they were born without one of their legs or that one of their legs was amputated.
- They were diagnosed as blind by an ophthalmologist.
- They have a developmental intellectual disability according to the diagnosis of a neurologist or child development specialist.
- They receive a disabled child benefit.
- They are entitled to a disabled child benefit and do not receive it for various reasons (for example because they stay in an institution or receive a mobility benefit).
- They have a developmental delay, they were referred by the ועדת זכאות ואפיון/ועדת השמה לשירותי חינוך מיוחדים to special education services.
Tax credits for Olim Chadashim
Benefits for Olim Who Arrived Before 2022:
Eligible for benefits for the first 42 months from the date of receiving their immigrant certificate (Teudat Oleh).
Months 1-18: 1/4 annual credit point per month.
Months 19-30: 1/6 annual credit point per month.
Months 31-42: 1/12 annual credit point per month.
Benefits for Olim Who Arrived in 2022 or Later:
Eligible for benefits for the first 54 months from the date of receiving their immigrant certificate (Teudat Oleh).
Months 1-12: 1/12 annual credit point per month.
Months 13-30: 1/4 annual credit point per month.
Months 31-42: 1/6 annual credit point per month.
Months 43-54: 1/12 annual credit point per month.
Important Notes:
Benefits are continuous, even if the immigrant has no income.
Unused benefits expire after 54 months.
Military service or higher education studies do not count towards the 54-month period. Immigrants can access benefits after completing their service or studies, including any unused portion.