Israel Tax Rates 2025: Brackets, Credit Points & Why You May Be Owed a Refund
A plain-English walkthrough of the 2025 Israeli income tax brackets, how credit points (nekudot zikui) work, and the everyday situations that lead to over-withholding — the money the Tax Authority quietly owes back to hundreds of thousands of employees each year.
How much is income tax in Israel?
Israel uses a progressive personal income tax system. Every additional shekel you earn is taxed at the rate of the bracket it falls into — not the whole salary at one flat rate. On top of that, an additional 3% surtax applies to very high incomes above roughly ₪721,560 per year.
The brackets below are the annual rates for tax year 2025 on earned income. Monthly payroll withholding is calculated as 1/12 of the annual figures.
2025 Israeli income tax brackets
| Annual income (ILS) | Marginal rate |
|---|---|
| Up to ₪84,120 | 10% |
| ₪84,121 – ₪120,720 | 14% |
| ₪120,721 – ₪193,800 | 20% |
| ₪193,801 – ₪269,280 | 31% |
| ₪269,281 – ₪560,280 | 35% |
| ₪560,281 – ₪721,560 | 47% |
| Above ₪721,560 | 50% (incl. surtax) |
Figures reflect the brackets in effect for the 2025 tax year. Always confirm the exact thresholds against the Israel Tax Authority publications before filing.
Credit points (nekudot zikui) in 2025
A credit point directly reduces the tax you owe. In 2025, one credit point is worth about ₪2,976 per year (roughly ₪248 per month). Every resident employee automatically receives 2.25 points, and residents earn a full 2.25 as well. Additional points are granted for life circumstances such as:
- Being a parent to young children
- Being a single parent
- Completing military or national service (for the years after discharge)
- Completing an academic degree or a vocational certification
- New immigrants (olim chadashim) during the first years in Israel
- Living in certain eligible development towns
Because payroll systems only apply credit points you actively claim, many employees lose points they were legally entitled to — a discharged soldier who never filed Form 101 correctly, a new graduate who forgot to update HR, or a parent whose child was born mid-year.
Why brackets and credit points create refunds
Israeli payroll withholding assumes your current month repeats for the entire year. That assumption breaks constantly in real life, and each time it breaks, too much tax is deducted. The Tax Authority then holds that money until you actively file to get it back.
Common triggers we see in the eligibility simulator:
- You didn't work the whole year. A student who worked only in the summer, a new immigrant who started mid-year, or someone between jobs — payroll withheld as if the salary would continue every month.
- Your salary jumped for a few months. Bonuses, overtime, or a temporary raise pushed you into a higher bracket for those paychecks even though your annual total stays in a lower bracket.
- You had two employers. Without a proper tax coordination (teum mas), the second job usually withholds at the maximum marginal rate.
- You had unclaimed credit points. New graduates, parents of small children, and recently discharged soldiers routinely miss points worth several thousand shekels a year.
- You paid for approved expenses. Contributions to a keren hishtalmut, an approved pension top-up, or life insurance can generate additional credit that payroll did not account for.
How to check if you're owed a refund
You can file for a refund for up to six tax years back. The fastest way to know whether it's worth your time is to answer a short set of questions about your work history, family status, and any of the situations above. Our free eligibility check does exactly that in about two minutes — no ID number required, no upfront fee.
Check your refund eligibility →
This guide is general information about the Israeli tax system, not personal tax advice. Actual eligibility and refund amounts depend on your individual circumstances and the assessment of the Israel Tax Authority.