Individual - Taxes on personal income

Last reviewed - 06 February 2021

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 647,640 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 2021, expressed in Israeli shekels, are as follows:

Annual taxable income (ILS) Tax on column 1 (ILS) Tax on excess (%)
Over (column 1) Not over
0 75,480 0 10
75,480 108,360 7,548 14
108,360 173,880 12,151 20
173,880 241,680 25,255 31
241,680 502,920 46,273 35
502,920 647,640 137,707 47
647,640 205,725 50

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.