New Tool Estimates Tax Refunds Up To 76,000 Shekels

A new online tool allows salaried employees in Israel to estimate potential tax refunds for up to six past tax years, with potential refunds ranging from 11,800 to 76,000 shekels. The tool identifies four common reasons for overpayment: working only part of a year, changing employers, donating to recognized institutions, and private life insurance policies. The system is designed to be highly accurate for these scenarios. The refund window covers tax years 2020 through 2025, with the oldest year expiring each subsequent year. Delaying the check means forfeiting a potential refund for that year.

Tax deductions are typically calculated based on the assumption of consistent monthly income. Any deviation from this, such as a month without work, changing jobs, a one-time bonus, or maternity leave, can lead to over-deduction. Working only part of the year is cited as the most frequent reason for such overpayments. The tool aggregates typical refund ranges for each of the 18 possible reasons it identifies.

Specific refund ranges provided include 6,000 to 32,000 shekels for working part of a year, 3,200 to 20,000 shekels for changing employers, 1,400 to 14,000 shekels for donations, and 1,200 to 10,000 shekels for life insurance. The tool also accounts for capital gains losses, which are often overlooked, as these can be offset against gains in the annual tax report. To use the tool, individuals need their Form 106 from each employer for the relevant years, along with donation receipts, bank statements, and insurance certificates.

Tax refund companies typically charge between 15% and 25% of the refund amount. For simpler cases, such as a single employer and no other income, filing independently can save thousands of shekels on a 20,000 shekel refund. However, filing an annual tax report can also result in additional tax liability, particularly for those with undeclared additional income. Refunds are paid via bank transfer and can take one to six months to process. Interest and linkage differentials are added to refunds, especially significant in years with high inflation, such as for the 2020 tax year if claimed now.