Israelis Can Save Thousands of Shekels Annually by Checking Tax Benefits

Residents of Israel have the opportunity to save thousands of shekels each year on income tax by utilizing the "nekudot zikuy" (tax points) system. The actual amount saved depends on individual circumstances such as marital status, number of children, and immigrant status. If an employer fails to account for eligible tax points, employees may have more tax withheld from their salaries than necessary.

In 2026, one tax point is valued at 242 shekels per month, or 2,904 shekels annually. For instance, two tax points can reduce monthly tax deductions by up to 484 shekels, and three points by up to 726 shekels. These points reduce the tax owed rather than providing direct payments, and any unused portion of the benefit is typically not paid out if the calculated tax is less than the eligible reduction.

Every resident taxpayer receives a base number of points: 2.25 for men and 2.75 for women, translating to a potential monthly tax reduction of 544.5 and 665.5 shekels, respectively. Additional points are available for parents, new immigrants, specific worker categories, and individuals with other legally recognized grounds, leading to significant variations in income tax even for employees with identical salaries.

Families with children are particularly affected by tax points, with the number of additional points varying based on the child's age and parents' marital status. Special rules apply to single or divorced parents, and families raising children with disabilities, often requiring individual assessments and documentation. New immigrants are eligible for extra tax points for a set period after arriving in Israel, with the duration and amount dependent on their immigration date.

Certain other groups, such as working teenagers aged 16 to 18 (eligible for one additional point), graduates of specific programs, and young workers, may also qualify for tax benefits. Some localities offer tax relief, which might be in the form of a direct income tax discount instead of points.

To verify eligibility, individuals should examine their payslip, known as a "tlush maskoret," which details the tax points used by their employer. This can be cross-referenced with the Israeli Tax Authority's official calculator to estimate the correct number of points based on personal circumstances. It is also crucial to check Form 101, filled out upon employment and updated periodically, as it forms the basis for many employer-calculated tax benefits. Outdated information regarding children, marital status, or immigrant status can lead to incorrect tax calculations.

If discrepancies are found, employees should contact their employer's accounting or HR department to provide updated documentation. Employers can sometimes adjust withholdings for the current period. For errors related to previous tax years, employees may be eligible for a tax refund. In 2026, salaried workers can generally claim refunds for the past six completed tax years, from 2020 to 2025.

Individuals with multiple employers must coordinate their taxes, or "tium mas," to avoid higher withholding rates on additional jobs. Tax points only reduce income tax and do not affect National Insurance (Bituah Leumi) or mandatory health insurance contributions. The actual savings are therefore dependent on the taxable income amount.