Israeli Veterans Can Claim Tax Refunds Up to Six Years Back Using Military Service Credits

Israeli military veterans are entitled to two additional tax credit points for 36 months after completing full mandatory service, which can reduce their annual tax by up to 5,808 shekels. However, many new veterans do not reach the income threshold to benefit from these credits in their first jobs, often in low-paying roles such as waitressing or call centers. The tax credit points, which are worth 242 shekels per month each in 2026, increase the tax-free income threshold from about 5,400 shekels to over 9,300 shekels for men and 10,200 shekels for women veterans.

A common issue arises when veterans hold a second job without coordinating tax credits between employers. In such cases, the second employer deducts tax at the highest rate of 47 percent, leading to excessive withholding. Veterans can avoid this by filing a tax coordination (te'um mas) online, which allocates credit points properly among employers. Without this, veterans like Maya, who worked simultaneously as a waitress and call center agent earning 7,000 and 4,000 shekels monthly respectively, can overpay tens of thousands of shekels in tax. Maya paid over 20,000 shekels more than owed in one year due to lack of coordination.

Veterans can claim tax refunds retroactively for up to six years, including interest and linkage differentials. Refund applications require military discharge certificates, annual tax forms (106) from all employers, and bank details, all submitted digitally without needing an accountant. The deadline for correcting tax overpayments for those discharged in 2020 is the end of 2026. Other common refund sources include partial-year employment, reserve duty payments taxed at source, and independent pension contributions.

The article emphasizes the importance of veterans ensuring their employers are aware of their military service status and properly applying the tax credits to avoid unnecessary tax payments. It also clarifies that the military tax credit points do not differentiate between combat, support, or rear service, unlike other benefits such as personal deposits or new reserve combatant credits introduced this year.