Definition of a tax credit in Israel
Nékoudate Zikouye - literally "deduction point", means a tax credit that you can deduct from your annual tax bill.
In other words, thanks to these deduction points, you can considerably reduce the taxes you have to pay to the State of Israel.
What is the value of a Nékoudate Zikouye?
In concrete terms, each Nékoudate Zikouye saves you a whopping 235 NIS in taxes/month, i.e. a saving of 2,820 NIS/year. (in 2023)
As you can see, the more Nékoudote Zikouye you can get, the less tax you'll have to pay, or even none at all!
How do you get these famous Nékoudote Zikouye?
The Israeli tax code has established well-defined rules and criteria for awarding these deduction points.
As the number of criteria is rather long, we will concentrate here on the main causes that entitle you to these famous "deduction points":
- All Israeli residents are automatically awarded 2.25 points. (Read the article: "How to become an Israeli resident)
- An Israeli resident woman is entitled to an additional 0.5 points.
- A new immigrant - Ole Hadash, is entitled to accumulate the following benefits during the 42 months following the date of his Aliyah:
- 3 points for the first 18 months.
- 2 points for the following 12 months.
- 1 point for the following 12 months.
- For a woman with minor children :
- In the year of the child's birth, this woman will be entitled to 0.5 points.
- For the following 17 years, this woman will be entitled to 1 additional point.
- The year the child turns 18, the woman will be entitled to 0.5 points.
- For a man with children under 4 :
- In the year of the child's birth, this man will be entitled to 1 additional point.
- For the following 2 years, this man will be entitled to 2 points/year.
- The following year (when the child is over 3 years old), this man will be entitled to 1 additional point.
- If you have studied for a bachelor's degree, you can claim 1 additional point / year of study completed. (Please consult us for restrictions applying to students who graduated in the years 2014 - 2017).
- If you have studied for a Master's degree, you are entitled to an additional 0.5 points / year of study completed. (Please consult us for restrictions applying to students who graduated in the years 2014 - 2017).
- A soldier who has completed his military service or cheirout leoumi (national service) can claim additional points for the 3 years following the end of his military service.
Are you an employee? Assert your rights!
If you are an employee, you must declare to your employer the reasons that entitle you to additional Nékoudate Zikouye.
To qualify for your Nékoudate Zikouye, all you have to do is fill in the Tofes 101 - Form 101, which must be completed every tax year, and in which you must describe your marital status, number of children, date of Aliyah, etc., as well as your income.
Please note that you alone are responsible for the truthfulness and accuracy of the information you provide to your employer. If, for example, you fail to inform your employer of the birth of your last child, your employer cannot be held responsible for any overpayment of tax.
Recover your money up to 7 years in the past
If you find that over the past 7 years you have paid more tax than necessary, or if you find criteria in the list above that entitle you to additional deduction points, you can recover the overpayment of tax over a retroactive period of 7 years!
Thus, an Ole Hadash - a new immigrant - who "forgot" to declare to his employer that he had made Aliyah, will be able to recover the modest sum of NIS 15,696, provided he has overpaid his taxes, of course.
Consult us if you would like assistance in obtaining your rights retroactively over a 7-year period.
The "Dray & Dray" accounting firm is based in Jerusalem & Tel Aviv.
We provide day-to-day support for your accounting and tax affairs in Israel.
We also have an English-speaking department specializing in business start-ups and accounting issues in England.
Finally, the firm's real estate department handles tax optimization and real estate issues for owners and investors in Israel.
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