Israeli tax residents are taxable on their worldwide income.
Non-resident individuals are subject to income tax on Israeli-source income and to capital gains tax on capital gains from assets situated in Israel (subject to special exemptions for non-residents; see Capital gains in the Income determination section for more information). Sourcing rules determine when income is to be regarded as being from an Israeli source.
Personal income tax rates
Taxation of individuals is imposed in graduated rates ranging up to 47%. Additionally, a 3% surtax applies on annual taxable income exceeding 649,560 Israeli shekels (ILS), resulting in a 50% maximum income tax rate. Non-residents are taxed at the same rates as Israeli residents. The annual tax brackets are an aggregation of the monthly brackets in force during the year, which are periodically updated for inflation. The annual bracket amounts for 2019, expressed in Israeli shekels, are as follows:
|Annual taxable income (ILS)
||Tax on column 1 (ILS)
||Tax on excess (%)
|Over (column 1)
A minimum tax rate of 31% generally applies to certain classes of passive income not derived from business or employment earned by a taxpayer under age 60.
Most types of interest, dividends, and capital gains have varying, fixed rates of tax set in the Income Tax Ordinance (ITO) (see the Income determination section for more information).
Local income taxes
There are no local taxes on income in Israel.