Israel taxes its residents on worldwide income at rates of up to 50%. But if you move there as a new immigrant (an oleh) or as an Israeli returning after at least ten years abroad, your income from abroad is tax-free for ten years. That covers foreign pensions, dividends, rent and gains on assets you hold abroad. For people who moved in 2025 or 2026, there's now a second break as well, on pay earned in Israel.
This guide covers Israeli personal tax in the 2026 tax year (the calendar year): the ten-year exemption and its 2026 changes, the centre of life test, the 2026 rates, Bituach Leumi (National Insurance), freelancing, crypto and treaties.
The key question: are you a new immigrant or a long-absent returning resident? The answer changes your tax on foreign income from up to 50% to nothing.
What's changed: a temporary order to encourage aliyah took effect on 31 March 2026. Olim and veteran returning residents who became resident between 5 November 2025 and 31 December 2026 pay no income tax on pay or business income earned in Israel up to a yearly ceiling, until 2030. People who become resident from 1 January 2026 lose the old reporting exemption, although their foreign income stays tax-free. The 20% and 31% bands are wider from January 2026, the 3% surtax threshold stays frozen at NIS 721,560 until 2027, and capital income above it pays an extra 2%.
๐ Israel tax at a glance for 2026
Topic | Details |
|---|---|
Tax system | Residents are taxed on worldwide income. New immigrants and veteran returning residents are exempt on income from abroad for ten years |
Tax year | The calendar year, 1 January to 31 December 2026 |
Income tax rates | 10% to 47% on income from work, plus a 3% surtax above NIS 721,560 (50% at the top) |
All-in on a US$100k salary | About 29.8% (NIS 310,000 at NIS 3.1 to US$1, including Bituach Leumi, health tax and the compulsory pension) |
Investments | 25% on dividends and gains on shares (30% for a substantial shareholder), plus a 2% surtax on capital income above the threshold |
Crypto gains | Treated as an asset, so capital gains tax, normally 25%. No specific crypto law yet |
Residence at a glance | Getting in: your centre of life in Israel, presumed after 183 days in a year, or 30 days in the year and 425 over three years. Leaving: hard; a centre of life test and an exit tax on your assets |
Double tax treaties | A wide network listed by the Tax Authority, including the UK and the US |
US dollar figures use NIS 3.1 to US$1, close to the Bank of Israel's representative rate of 3.11 on 19 October 2026.
๐ Bank of Israel: representative exchange rates
The ten-year exemption for olim and returning residents
Why do so many people moving to Israel pay no tax on their money from abroad? Because of section 14 of the Income Tax Ordinance, as rewritten by Amendment 168 in 2008.
Image 1 โ ten years tax-free on foreign income, and a 2026 break on Israeli pay
If you're a new immigrant (oleh), or a veteran returning resident, you're exempt from Israeli tax for ten years from the date you became resident on income produced or accrued outside Israel, and on income from assets abroad. A veteran returning resident is an Israeli who lived abroad for at least ten years in a row before coming back.
Exempt for ten years: a foreign pension, foreign dividends and interest, rent from property abroad, profits of a business run abroad, and gains on selling assets held abroad.
Still taxed: income from Israel, including pay for work you do in Israel, at the normal rates (subject to the 2026 break below).
From year eleven: your worldwide income is taxed like any other resident's. There's no taper.
The 2026 reporting change. Until 2025, olim and veteran returning residents also didn't have to report their foreign income and assets. People who become resident from 1 January 2026 lose that reporting exemption. The Tax Authority's Circular 4/2026 says they must file Form 150 on holdings in foreign companies with their annual return, while those who were resident before 2026 don't have to. The tax exemption itself hasn't changed.
The 2026 earned income break. Under the temporary order in force since 31 March 2026, an oleh or veteran returning resident who became resident between 5 November 2025 and 31 December 2026 also pays no income tax on pay, business or professional income earned in Israel, up to a yearly ceiling:
2026: NIS 600,000, cut in proportion to the part of the year left after you become resident
2027 and 2028: NIS 1,000,000
2029: NIS 350,000
2030: NIS 150,000
Income above the ceiling is taxed on the normal scale. Interest, dividends, rent and gains aren't covered. Income paid by a relative is capped at NIS 140,000 a year. If you stop being resident in 2028 or 2029 and spend fewer than 75 days in Israel that year, the exemption is cancelled backwards. You claim it through payroll with Form 116ืข, or in your annual return.
When you become tax resident in Israel, and how you stop
Under section 1 of the Income Tax Ordinance, you're resident if your centre of life is in Israel. The test looks at all your family, economic and social ties, including where your permanent home is, where you and your family live, and where you usually work.
Two day-count presumptions back it up. You're presumed resident for a tax year if you're in Israel:
for 183 days or more in the year, or
for 30 days or more in the year, and 425 days or more in total across that year and the two before it
Either you or the Tax Authority can rebut these presumptions, so the centre of life test always has the final say.
Leaving is harder. You stop being resident only when your centre of life moves abroad, and the 425-day count can keep the presumption alive for a year or two after you go. Israel also has an exit tax: under section 100A, when you stop being resident your assets are treated as sold the day before. You can choose to defer paying the tax until you actually sell, but the tax charge itself isn't deferred.
๐ Income Tax Ordinance, section 1: definition of an Israeli resident (in Hebrew)
Income tax rates for 2026
Income from work, whether a salary or self-employed profit, is taxed on this scale. Each resident gets credit points that reduce the tax: one point is worth NIS 242 a month (NIS 2,904 a year).
Israel income tax rates for 2026 (income from work)
Annual taxable income | Rate |
|---|---|
Up to NIS 84,120 | 10% |
NIS 84,121 to NIS 120,720 | 14% |
NIS 120,721 to NIS 228,000 | 20% |
NIS 228,001 to NIS 301,200 | 31% |
NIS 301,201 to NIS 560,280 | 35% |
Over NIS 560,280 | 47% |
Surtax on taxable income over NIS 721,560 | 3% extra, plus 2% more on capital income |
Source: Israel Tax Authority, 2026 monthly deductions booklet (Income Tax Ordinance sections 121 and 121B).
Dividends, interest, rent and capital gains have their own flat rates, covered below.
Worked example
You're resident and earn NIS 310,000 (US$100k) from an Israeli employer, with no olim relief.
Tax on the scale is NIS 60,764. The basic 2.25 credit points for a resident man (NIS 6,534) bring it down to NIS 54,230.
Bituach Leumi and health tax at 4.27% on the first NIS 7,703 a month and 12.17% on the rest: NIS 30,425.
The compulsory pension at 6% of pay up to the average wage of NIS 13,769 a month: NIS 9,914, less a tax credit of about NIS 2,268.
Your all-in bill is about NIS 92,300, or 29.8% of your salary. If you qualify for the 2026 olim break, the income tax disappears and the all-in cost falls to about 13% in a full year.
Freelancing in Israel
Self-employed profit is taxed on the same scale as a salary. The bigger difference is Bituach Leumi: the self-employed pay 7.7% on income up to NIS 7,703 a month and 18% on income above it, up to NIS 51,910 a month. You must also pay into a pension fund on income up to the average wage.
On US$100k of profit (NIS 310,000), that's NIS 54,230 of income tax and NIS 46,279 of Bituach Leumi and health tax, about 32%. With the compulsory pension, the all-in cost is about 35% to 37%, depending on how much of your contributions you can deduct.
There's no turnover-based regime for income tax, so most freelancers stay on the scale. The 2026 olim break does cover business and professional income earned in Israel, so a qualifying freelancer who moved in the window pays only contributions on profit under the ceiling.
๐ National Insurance Institute: contribution rates for the self-employed from 1 January 2026
Crypto, investments and pensions
Is crypto taxed in Israel? Yes. The Tax Authority's published position treats crypto as an asset rather than currency, so a gain on selling it is taxed as a capital gain, normally at 25%. If you trade often enough to look like a business, the profit can be taxed as business income on the scale instead. Israel still has no crypto law: the State Comptroller has noted that the Tax Authority's position hasn't been written into legislation. If your bank won't accept money from a crypto sale, the Tax Authority has a temporary procedure, using Form 909, for paying the tax due on those gains.
Dividends: 25%, or 30% for a substantial shareholder.
Gains on shares and securities: 25% of the real (inflation-adjusted) gain, or 30% for a substantial shareholder.
Interest: 15% on bank deposits and savings plans, and up to 25% on interest from securities.
Rent: residential rent in Israel can be taxed at a flat 10%, and rent from property abroad at 15%.
Surtax: 3% on taxable income above NIS 721,560, plus 2% more on capital income, so up to 30% on dividends and gains for the largest portfolios.
Pensions: a foreign pension is taxable for an ordinary resident, but exempt for ten years for olim and veteran returning residents.
Israel has no inheritance tax and no wealth tax. For olim, most of this list doesn't apply for ten years if the income and assets are abroad. Israeli shares and deposits are taxed from day one.
๐ Israel Tax Authority: Form 1322, capital gains on securities at 25% and 30% (in Hebrew)
๐ State Comptroller's library: report on the taxation of digital currencies (2024)
๐ Israel Tax Authority: reporting crypto activity and paying the tax on crypto sales (Form 909)
Social security: Bituach Leumi and health tax
Do expats pay Bituach Leumi? Yes, if they're resident in Israel. The National Insurance Institute collects both National Insurance and health insurance contributions. From 1 January 2026:
Employees: 4.27% on pay up to NIS 7,703 a month and 12.17% on pay above that, up to a ceiling of NIS 51,910 a month. Your employer adds 4.51% and 7.6%.
Self-employed: 7.7% and 18% on the same bands.
Income not from work (for example pensions, rent and dividends): nothing on the first NIS 3,442 a month, then about 12%. People with no income at all pay a minimum of NIS 266 a month.
Two rules help new arrivals. A new immigrant with no income, or income below NIS 688 a month, is exempt from National Insurance for 12 months from aliyah and from health insurance for 6 months (12 if they receive absorption subsistence payments). And the National Insurance Law leaves out income that isn't from work and is exempt from tax, so foreign pensions and investment income covered by the ten-year exemption don't attract contributions.
๐ National Insurance Institute: contribution rates for employees from 1 January 2026
๐ National Insurance Institute: rates for people with income not from work
๐ National Insurance Institute: exemptions for new immigrants (in Hebrew)
๐ National Insurance Law, chapter 15, section 350: income left out of contributions (in Hebrew)
Double tax treaties
Does Israel have double tax treaties? Yes. The Israel Tax Authority keeps a wide network of income tax treaties. They include the UK, under a 1962 convention updated by a protocol in force since 28 October 2019, and the US, under a 1975 treaty.
Treaties settle residence if both countries claim you and cut withholding tax. For olim, they matter mostly for your old country's claim and for income from Israel.
๐ Israel Ministry of Finance: list of treaties for preventing double taxation
๐ UK government: the UK and Israel double taxation convention
๐ IRS: the United States and Israel income tax treaty
Living in Israel long term
Israel has no digital nomad visa. Visitors enter with the ETA-IL electronic travel authorisation or a visitor visa, which aren't routes to living there.
The long-stay routes are narrow: aliyah for people eligible under the Law of Return, returning residency for Israelis, or a work visa tied to an Israeli employer. There's no visa designed for working remotely from Israel for a foreign employer.
๐ Population and Immigration Authority: ETA-IL and entry to Israel
Who is Israel good for?
How does Israel compare for different kinds of mover? Ratings are relative to the 150+ countries TaxPilot covers, based on 2026 rules and the all-in cost including Bituach Leumi, health tax and the compulsory pension. We convert at NIS 3.1 to US$1.
โ๏ธ Who is Israel good for? Tax ratings for expats in 2026
Expat profile | Israel rating | Why |
|---|---|---|
Employees | Moderate (Good for 2026 olim) | About 29.8% all-in on a US$100k salary (NIS 310,000): income tax of NIS 54,230, NIS 30,425 of Bituach Leumi and health tax, and the compulsory 6% pension. That's close to the Poor line. Olim who moved between 5 November 2025 and the end of 2026 pay no income tax on this salary in 2027 (about 13% all-in), but the window is closing and the relief ends in 2030, so it isn't counted. |
Freelancers (self-employed) | Poor | About 35% to 37% on US$100k of profit: the same income tax scale as employees, self-employed Bituach Leumi and health tax of 7.7% and 18% (NIS 46,279), and a compulsory pension contribution. There's no low-tax turnover regime. The 2026 olim exemption also covers business income but isn't counted for freelancers. |
Retirees | Excellent | 0% on a US$40k foreign pension plus US$20k of foreign investment income for a new immigrant (oleh) or veteran returning resident, for ten years from becoming resident. The National Insurance Law leaves tax-exempt income that isn't from work out of contributions. There's no inheritance tax. Without that status, it's about 22%: the pension on the scale, 25% on dividends, plus Bituach Leumi and health tax. |
Crypto gains | Moderate | The Tax Authority treats crypto as an asset, so a gain is a capital gain, normally at 25%. A US$100k gain stays under the surtax threshold. There's no crypto law yet, and frequent trading can be taxed as business income on the scale. Whether a new immigrant's crypto counts as an asset abroad isn't settled. |
Investment income | Excellent | Untaxed for ten years for olim and veteran returning residents, if the portfolio is held abroad: foreign dividends and gains on foreign assets are exempt, and so outside Bituach Leumi too. For anyone else it's about 29%: 25% on dividends and gains, plus contributions on the dividends. |
Digital nomad visa | Poor | Israel has no digital nomad visa. Visitors come in on the ETA-IL travel authorisation or a visitor visa. The long-stay routes are aliyah, for people eligible under the Law of Return, or a work visa tied to an Israeli employer. |
Filing and deadlines
The tax year is the calendar year. Employees have tax and Bituach Leumi deducted through payroll, and many don't have to file a return.
Deadlines: for the 2025 tax year, paper returns were due by 29 May 2026 and online returns by 30 June 2026. Expect similar dates in 2027 for 2026.
Foreign income: reported on Form 1324, and holdings in foreign companies on Form 150. Olim who arrived from 2026 need Form 150 even during the ten-year exemption.
2026 olim break: claim it through your employer with Form 116ืข, or on your return for income above the payroll limit.
๐ Israel Tax Authority: filing the annual return for 2025, deadlines and forms (in Hebrew)
Frequently asked questions
Do new immigrants pay tax on foreign income in Israel?
No, for ten years. A new immigrant (oleh) or veteran returning resident is exempt on income produced abroad and income from assets abroad, such as foreign pensions, dividends, rent and gains, for ten years from becoming resident. Income from Israel is taxed normally, apart from the 2026 earned income break.
What changed for olim in 2026?
Two things. People who became resident between 5 November 2025 and 31 December 2026 get an exemption on pay and business income earned in Israel up to a yearly ceiling, from NIS 600,000 in 2026 to NIS 150,000 in 2030. And people who become resident from 1 January 2026 no longer get the old reporting exemption, so they must report holdings in foreign companies on Form 150.
When do I become tax resident in Israel?
When your centre of life is in Israel. You're presumed resident if you spend 183 days or more there in a tax year, or 30 days or more in the year and 425 days or more over that year and the two before. You or the Tax Authority can rebut the presumption.
What are the income tax rates in Israel for 2026?
Income from work is taxed from 10% up to 47% above NIS 560,280, plus a 3% surtax on taxable income above NIS 721,560. Each resident gets credit points worth NIS 2,904 a year each. Dividends and gains on shares are taxed at 25%, with an extra 2% surtax on capital income above the threshold.
Do expats pay Bituach Leumi in Israel?
Yes, if they're resident. Employees pay 4.27% on pay up to NIS 7,703 a month and 12.17% above, up to NIS 51,910 a month, including health tax. The self-employed pay 7.7% and 18%. Income that's exempt from tax and not from work, like an oleh's foreign pension, is left out.
Is crypto taxed in Israel?
Yes. The Tax Authority treats crypto as an asset, so gains are capital gains, normally taxed at 25%, or as business income if you trade like a business. There's no specific crypto law yet.
Where to go next
๐ Best countries for retirees
๐ Best countries for investors
๐ Best countries for entrepreneurs
๐ Hardest countries to stop being tax resident
๐ Special tax regimes for new residents
Important information
This article is general information and does not constitute tax, legal, immigration or financial advice, and does not create a client relationship. Tax outcomes depend on travel history, income sources, treaty status and the law applying to the relevant year. Rates, thresholds and regimes change, and some measures described may be proposed rather than enacted; this article reflects our understanding as at the date of publication. Obtain advice from a suitably qualified professional before acting or refraining from action.
