Israel Sets Severance Pay at One Month’s Salary Per Year With 2026 Tax Exemption Cap
How 2 Israeli newsrooms covered this story — translated into English and compared side by side.
First reported by N12 · Jul 5, 2026
What happened
Israeli law grants severance pay of one month’s salary per year of service to employees dismissed after one year, with a 2026 tax exemption cap of 13,750 shekels per year. Contributions to pension funds since 2008 cover severance fully if maintained. Severance exceeding the exemption is taxable, and employees resigning under certain conditions may also qualify. Additional termination rights include advance notice and timely payments.
- 01Employees dismissed after one year receive severance of one month’s salary per year worked.
- 022026 tax exemption on severance pay is capped at 13,750 shekels per year of service.
- 03Since 2008, employers contribute 8.33% monthly to pension funds covering severance pay.
- 04Severance exceeding the exemption limit is taxed at the employee’s marginal rate.
- 05Certain resignations, like due to poor conditions or health, qualify for severance.
- 06Employees must receive Form 161 and timely severance payment upon job termination.
Summary translated & synthesized from the sources below by baba. Read each original for the full report.
Full coverage · 2 outlets
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