Israel - Tax year 2025
Your Israeli financial calculators
From net salary with Bituach Leumi and income tax, to VAT and compound interest. All figures cite Israeli Tax Authority (ITA) and National Insurance Institute (NII) sources.
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Salary and income tax
3 calculatorsNet salary after Bituach Leumi, health tax, and Mas Hachnasa (income tax) for Israeli employees 2025. Based on ITA official brackets.
Investments
3 calculatorsDividend withholding, compound interest, and savings goal calculators for Israeli investors.
Business
2 calculatorsVAT and corporate tax calculators for Israeli businesses 2025.
Personal finance
3 calculatorsFIRE, inflation, and loan calculators for planning your financial future in Israel.
Calculations apply to a single resident taxpayer (class A) with employment income only. No individual deductions (pension contributions, pension fund credits, study fund, etc.) are included. Figures are provided for informational purposes only, not as tax advice. Consult the ITA (misim.gov.il) or a licensed tax advisor for your specific situation.
How Israeli income tax works
Israel uses a progressive income tax system administered by the Israeli Tax Authority (ITA, misim.gov.il). For 2025, tax brackets start at 10% on monthly income up to approximately 7,010 ILS, rising through 14%, 20%, 31%, 35%, and 47% on income above 67,630 ILS per month. Every resident receives a basic personal credit point (nekudat zikui) worth 2,904 ILS per year, which reduces the final tax liability directly. Employees also pay National Insurance (Bituach Leumi) contributions to the NII (btl.gov.il) and a separate health tax, both calculated on gross salary with a reduced rate below a lower threshold and a higher rate above it. Together these three levies determine your actual take-home pay, which our income tax calculator computes in real time.
Bituach Leumi and health tax explained
Bituach Leumi (National Insurance Institute, NII) is the Israeli social security system. Employee contributions for 2025 are 0.4% on income up to 7,522 ILS per month and 7% on income above that threshold, up to the NII ceiling of roughly 49,030 ILS per month. In addition, employees pay a health tax at 3.1% below the lower threshold and 5% above it. Both levies are withheld by the employer via the payroll system (Nikui Mas). The health tax funds the four public HMOs (Kupot Holim), while Bituach Leumi funds maternity, disability, unemployment, and retirement benefits. Neither contribution is deductible from income tax, but together they represent a meaningful share of gross salary, particularly for middle-income earners.
VAT and corporate tax for Israeli businesses
Value Added Tax (Mas Erech Musaf, VAT) is levied at a standard rate of 17% on most goods and services supplied in Israel. Businesses with annual turnover above the registration threshold (approximately 120,000 ILS in 2025) must register with the ITA and charge VAT on sales while recovering input VAT on purchases. Certain transactions, including exports and the sale of residential housing to first-time buyers, are zero-rated. Corporate income tax (Mas Hachnasot Chevarot) is a flat 23% on net taxable profit for companies. This rate has been stable since 2018. Dividends distributed from after-tax company profits are subject to an additional withholding tax of 25% for regular shareholders or 30% for substantial shareholders (those holding 10% or more).
Planning for financial independence in Israel
Financial independence planning in Israel involves several tax-advantaged vehicles. The Keren Hishtalmut (study fund) allows employees to contribute up to a tax-exempt ceiling each year, with employer contributions also partially exempt. Pension funds (Kranot Pensia) are mandatory for employees and carry significant tax benefits on contributions and growth, though withdrawals are taxed. For investment portfolios outside these wrappers, capital gains on publicly traded securities are taxed at 25% (or 30% for substantial shareholders), and real gains are adjusted for inflation using the Central Bureau of Statistics index. Our FIRE, compound interest, and savings goal calculators help you model long-term growth, though they do not account for individual tax wrappers. Consult a licensed financial planner (Yoetz Pensioni) for personalized retirement planning.
Frequently asked questions
What is the income tax rate in Israel for 2025?
Israel applies seven progressive tax brackets to employment income in 2025. The rates are 10%, 14%, 20%, 31%, 35%, 47%, and a top surtax of 3% on annual income above approximately 721,560 ILS, bringing the effective ceiling to 50%. These brackets apply to monthly gross salary before Bituach Leumi and health tax deductions. Every resident taxpayer receives at least one credit point (nekudat zikui), worth 2,904 ILS per year (242 ILS per month), subtracted directly from the calculated tax. Additional credit points are available for new immigrants, single parents, soldiers completing mandatory service, and others. The ITA publishes the authoritative bracket table each year at misim.gov.il. Our income tax calculator applies the 2025 brackets and the standard single credit point automatically.
How is Bituach Leumi (National Insurance) calculated?
Bituach Leumi contributions are calculated on gross monthly income in two tiers. For 2025, the employee pays 0.4% on the portion of income up to the lower threshold (approximately 7,522 ILS per month) and 7% on the portion above that threshold up to the NII ceiling (approximately 49,030 ILS per month). Income above the ceiling is exempt from employee NII contributions. The health tax uses similar tiers: 3.1% below the lower threshold and 5% above it, up to the same ceiling. Employers also contribute NII at higher rates on top of employee deductions, but those employer contributions do not reduce the employee take-home pay directly. Both employee deductions are withheld at source each month. Our National Insurance calculator shows the precise split between the NII portion and the health tax portion.
What is the VAT rate in Israel and which goods are exempt?
The standard VAT rate in Israel (Mas Erech Musaf) is 17% and has been at this level since October 2015. Virtually all domestic sales of goods and services are subject to VAT at this rate. Zero-rated transactions (0%) include the export of goods, international services, and the sale of residential dwellings to qualifying first-time buyers under specific conditions. Certain financial services and insurance premiums are exempt from VAT rather than zero-rated, meaning the supplier cannot recover input VAT on related costs. Businesses registered for VAT file monthly or bimonthly returns with the ITA and remit the difference between output VAT collected from customers and input VAT paid to suppliers. Small businesses below the registration threshold may operate as Osek Patur (exempt dealer) and neither charge nor recover VAT.
Are these calculators accurate for my specific tax situation?
These calculators apply the standard 2025 tax brackets, NII thresholds, and VAT rate published by the ITA and NII for a single resident employee (tax class A) with employment income only. They include the basic personal credit point but do not account for additional credit points, pension contribution deductions, Keren Hishtalmut exemptions, spouse or dependent credits, disability credits, or any other individual deductions and exemptions that may apply to your situation. The results are therefore best treated as a reliable baseline estimate, not as a definitive tax calculation. For payroll purposes, employers use the official ITA tax tables and should consult a licensed accountant (Roa Heshbon) or payroll specialist. For personal planning, a licensed tax advisor or financial planner can model your complete picture including all applicable deductions and credits.