Israel Tax Rates
Israel operates a progressive income tax system with rates ranging from 10% to 50%, administered by the Israel Tax Authority (ITA). The standard corporate tax rate is 23%, and VAT is 18%. Israel is known for its vibrant high-tech startup ecosystem, supported by generous R&D tax incentives and special tax benefits under the Law for Encouragement of Capital Investments. New immigrants (olim) and returning residents benefit from a 10-year tax exemption on foreign-sourced income.
Top Income Tax Rate
50%
Corporate Tax Rate
23%
VAT / Sales Tax
18%
Capital Gains Tax
25%
Detailed Tax Information
Income Tax Brackets
Israel imposes a progressive personal income tax with seven brackets ranging from 10% to 50%. The top 50% rate includes a 3% surtax on high earners (income exceeding approximately ILS 721,560). Residents are taxed on worldwide income, while non-residents are taxed only on Israeli-sourced income. New immigrants (olim hadashim) and returning residents (after 10+ years abroad) are granted a 10-year exemption on foreign-sourced income and capital gains, plus reporting exemptions.
| Income Range | Tax Rate |
|---|---|
| ₪0 – ₪84K | 10% |
| ₪84K – ₪121K | 14% |
| ₪121K – ₪194K | 20% |
| ₪194K – ₪269K | 31% |
| ₪269K – ₪560K | 35% |
| ₪560K – ₪722K | 47% |
| ₪722K+ | 50% |
Corporate Tax
Israel's standard corporate tax rate is 23%. Companies qualifying under the Law for Encouragement of Capital Investments can benefit from significantly reduced rates: 'Preferred Enterprise' status provides a 16% rate (7.5% in designated development areas); 'Preferred Technological Enterprise' status offers 12% (7.5% in development areas) on income derived from qualifying intellectual property. 'Special Preferred Technological Enterprise' status (for companies with consolidated revenue exceeding ILS 10 billion) offers a 6% rate.
Standard Rate
23%
Capital Gains Tax
Capital gains in Israel are generally taxed at 25% for individuals. If the seller is a 'significant shareholder' (holding 10% or more at any time during the 12 months preceding the sale), the rate increases to 30%. Real capital gains (inflation-adjusted) on assets acquired before 2003 may benefit from a linear calculation providing partial exemption. Corporate capital gains are included in taxable income at the 23% corporate rate. The sale of a primary residence is exempt from capital gains tax.
Short-Term Rate
25%
Long-Term Rate
25%
Rate
25%
VAT / Sales Tax
Israel's VAT (Ma'am) is levied at a standard rate of 18% (increased from 17% effective January 2025). There are no reduced positive rates; transactions are either standard-rated, zero-rated, or exempt. Exports and international services are zero-rated. Exempt supplies include financial services, residential rentals (below certain thresholds), and certain real estate transactions. The city of Eilat is a VAT-free zone for most transactions.
Standard Rate
18%
Cryptocurrency Tax
Israel treats cryptocurrency as a taxable asset (property) rather than currency. Capital gains from the sale or exchange of cryptocurrency are subject to 25% capital gains tax for individuals (30% for significant holders). The Israel Tax Authority issued a circular in 2018 confirming this treatment. Mining income and staking rewards are treated as ordinary business income subject to progressive income tax rates and potentially VAT.
Tax Treaties
Israel has approximately 58 double taxation treaties in force with countries worldwide. These treaties provide relief from double taxation and typically reduce withholding tax rates on dividends, interest, and royalties. Israel has signed the OECD Multilateral Convention (MLI) and is implementing BEPS recommendations. The U.S.-Israel tax treaty is particularly important given the strong economic ties between the two countries.
Treaty Network
58
Double taxation agreements
Major treaty partners:
Key Details
Relocate to Israel
See how much you could save by moving here from your current country.
+$2K
Tax in United States
$24K
24.4% effective
Tax in Israel
$23K
22.6% effective
You Save
7.1%
less tax annually
US Citizens: Important Note
US citizens are taxed on worldwide income regardless of residence. You'll still need to file US taxes, though the Foreign Earned Income Exclusion and Foreign Tax Credit may reduce your liability.
