Israel Personal Income Tax Rates for 2026
Israeli tax residents are generally taxed on worldwide income. Non-residents are generally taxable on Israeli-source income, subject to applicable exemptions and tax treaties. For 2026, employment and other qualifying earned income is taxed progressively as follows:
| Annual taxable income (NIS) | Monthly equivalent (NIS) | Marginal rate |
|---|---|---|
| Up to 84,120 | Up to 7,010 | 10% |
| 84,121 - 120,720 | 7,011 - 10,060 | 14% |
| 120,721 - 228,000 | 10,061 - 19,000 | 20% |
| 228,001 - 301,200 | 19,001 - 25,100 | 31% |
| 301,201 - 560,280 | 25,101 - 46,690 | 35% |
| 560,281 - 721,560 | 46,691 - 60,130 | 47% |
| Above 721,560 | Above 60,130 | 47% plus applicable surtax |
Tax is calculated progressively, so each rate applies only to the portion of income falling within that band. Personal tax credits are generally granted through tax-credit points, with entitlement depending on residence and personal or family circumstances.
High-Income Surtax
A 3% surtax applies to taxable income above the statutory high-income threshold, which is NIS 721,560 for 2026. This can produce a maximum marginal rate of 50% on ordinary taxable income.
From 2025, an additional 2% surtax can also apply to the portion of specified capital-source income above the statutory threshold. Capital-source income can include items such as capital gains, dividends, interest, rental income and certain passive royalties. Detailed statutory rules and exceptions apply.
Israel Corporate Income Tax Rate for 2026
The general Israeli corporate income tax rate is 23% in 2026. Israeli-resident companies are generally taxed on worldwide income, while non-resident companies are generally taxed on Israeli-source income and income attributable to an Israeli permanent establishment.
Reduced rates and incentives may apply under the Law for the Encouragement of Capital Investments where the statutory conditions are satisfied.
For tax years beginning after 31 December 2025, Israel has introduced a qualifying domestic minimum top-up tax (QDMTT) for multinational enterprise groups within the Pillar Two framework. In broad terms, qualifying groups with consolidated annual revenue of at least €750 million can become subject to a top-up tax where the Israeli effective tax rate is below 15%.
Israel VAT Rate
The standard Israeli Value Added Tax (VAT) rate is 18%. The rate increased from 17% to 18% with effect from 1 January 2025 and remains the standard rate in 2026.
Exports and certain qualifying transactions may be zero-rated, while specific transactions can be exempt. Registration, invoicing and periodic reporting requirements depend on the taxpayer and transaction.
Capital Gains Tax in Israel
For individuals, capital gains are generally taxed at 25%, although a 30% rate commonly applies to gains involving a substantial shareholder and special rules apply to certain assets, historic gains and real estate. Companies generally pay tax on capital gains at the ordinary corporate tax rate of 23%.
Additional surtax may apply to high levels of capital-source income. Tax treaty relief and statutory exemptions may also be available to qualifying non-residents.
Israel Withholding Tax / Tax Deducted at Source
Israel operates an extensive withholding-at-source system for salary and many other payments. The applicable rate depends on the nature of the payment, the status of the recipient, available withholding certificates and, for non-residents, any applicable double-tax treaty.
| Payment | General position |
|---|---|
| Employment income | Income tax is normally withheld by the employer through payroll. |
| Dividends paid to a non-resident company | Domestic rates are commonly 25% or 30%, subject to treaty relief and statutory conditions. |
| Interest paid to a non-resident company | A general domestic company rate can be 23%, subject to exemptions, reduced statutory rates and treaty relief. |
| Royalties paid to a non-resident company | A general domestic company rate can be 23%, subject to treaty relief and approved reductions. |
National Insurance and Health Insurance Contributions for 2026
Salaried employees
From 1 January 2026, the reduced contribution band applies to monthly wages up to NIS 7,703 and the maximum monthly income subject to contributions is NIS 51,910.
| Monthly wage portion | Employer total | Employee total |
|---|---|---|
| Up to NIS 7,703 | 4.51% | 4.27% |
| Above NIS 7,703 up to NIS 51,910 | 7.60% | 12.17% |
Self-employed persons
| Monthly income portion | National + health insurance |
|---|---|
| Up to NIS 7,703 | 7.70% |
| Above NIS 7,703 up to NIS 51,910 | 18.00% |
Different rates can apply by age, retirement status and category of insured person.
Tax Payments, Advances and Filing
Income tax on employment income is generally deducted at source by the employer. Businesses and self-employed taxpayers may be required to make periodic advance tax payments based on turnover or assessments. Companies likewise make advance payments during the tax year.
Annual filing obligations and deadlines vary according to taxpayer type, method of filing, extensions and instructions issued by the Israel Tax Authority. Taxpayers should check the current filing notice applicable to their particular return rather than relying on a fixed historic deadline.
Depreciation and Fixed Assets
Israeli tax law allows depreciation deductions for qualifying fixed assets used in producing taxable income. Rates depend on the type of asset and applicable regulations, and special or accelerated depreciation rules may apply in specific cases. Because the older fixed-asset table on this page was based on historical rates, taxpayers should use the current statutory depreciation regulations and Israel Tax Authority guidance when computing a deduction.
Official Israel Tax Resources
- Israel Tax Authority - annual and monthly payroll withholding tables
- Israel Tax Authority - income tax withholding calculator
- Israel Tax Authority - tax credit point calculator
- Israel Tax Authority - income tax information for employers
- Israel Tax Authority - withholding tax certificates and bookkeeping approvals
- Israel Tax Authority - foreign-resident payment declaration and request for reduced withholding
- Israel Tax Authority - VAT statutory amount updates
- National Insurance Institute - salaried worker contribution rates
- National Insurance Institute - self-employed contribution rates
Information note: Israeli tax treatment can depend on residence, source of income, age, ownership percentage, treaty entitlement, incentives and the nature of a transaction. This page provides general tax-rate information and should be checked against the current legislation and Israel Tax Authority guidance for a particular case.