How much do olim credit points actually add to your monthly take-home pay? In 2026, each point cuts your Israeli income tax by NIS 242 a month, so the 3 extra points in Phase 1 (months 1-18 from aliyah) are worth approximately NIS 726 a month on any salary that owes at least that much tax. At lower salaries the credit can wipe income tax to zero; at higher salaries it stays a flat NIS 726 boost. The schedule then drops to 2 points and finally 1 point before ending at month 42.
This is general information, not tax, legal, or financial advice. Cross-border (US/UK) and Israeli tax interact in complex ways. The Israeli figures below use the 2026 credit-point value of NIS 242 and the 2026 income-tax brackets; consult a qualified cross-border professional before acting on any number.
Why the Number Surprises Almost Every New Oleh
Almost every new oleh is blindsided when they realize the famous "olim tax benefit" is not a cheque, a refund, or a percentage cut. It is a fixed credit that lowers the income-tax line on your monthly payslip - and only the income-tax line. It does nothing to Bituach Leumi contributions, health levy, pension deductions, or the employer-side costs sitting on top of your salary. Once you see what it actually moves, it becomes much easier to plan around the three-phase taper and the cliff at month 42.
What Each Credit Point Is Worth in 2026
In 2026 each credit point is worth NIS 242 per month of Israeli income tax cancelled. That figure is the Israel Tax Authority annual reset for 2026; it changes each January with the CPI update, so always verify the year on any source you read.
A standard single Israeli resident gets 2.25 base credit points (worth NIS 544.50 a month). An oleh in Phase 1 adds 3 extra points (NIS 726), giving 5.25 in total - worth NIS 1,270.50 a month of income-tax relief. The same person in Phase 3 has only 1 extra point on top of the base, dropping the relief to NIS 786.50.
The Olim 3-2-1 Schedule, in Shekels
| Phase | Months from aliyah | Extra olim points | Total points (single resident) | Monthly relief at NIS 242 per point |
|---|---|---|---|---|
| Phase 1 | Months 1-18 | 3.0 | 5.25 | NIS 1,270.50 |
| Phase 2 | Months 19-30 | 2.0 | 4.25 | NIS 1,028.50 |
| Phase 3 | Months 31-42 | 1.0 | 3.25 | NIS 786.50 |
| Post-schedule | Month 43 onward | 0.0 | 2.25 | NIS 544.50 |
The "relief" column is the maximum the credit can cancel. If your Israeli income-tax bill in a given month is smaller than that figure, the credit caps at the actual liability and the leftover is not refunded.
How Phase 1 Lands on Three Real Salaries
Salary: NIS 10,000 Gross a Month
At NIS 10,000 gross the 2026 brackets put you entirely inside the 10% rung (everything up to NIS 10,000 is taxed at 10%), so the pre-credit income tax is roughly NIS 1,000 per month. After 2.25 base points (NIS 544.50) a non-oleh resident still owes about NIS 455 in income tax. An oleh in Phase 1 with 5.25 total points has NIS 1,270.50 of credit available - more than the entire tax liability. Tax goes to zero; the unused NIS 271 does not become a refund.
- Non-oleh single resident: approximately NIS 455 income tax. Take-home after income tax only is around NIS 9,545.
- Oleh Phase 1 (months 1-18): NIS 0 income tax (credit absorbs the full bill). Take-home after income tax only is around NIS 10,000.
- Oleh Phase 3 (months 31-42): about NIS 213 income tax. Take-home after income tax only is around NIS 9,787.
At this salary the monthly Phase 1 advantage over a non-oleh is roughly NIS 455 - smaller than the headline "NIS 726" because the credit is already running into the tax-bill ceiling. The take-home figures above are pre-Bituach Leumi and pre-health-levy: those deductions apply separately and are not affected by credit points.
Salary: NIS 15,000 Gross a Month
At NIS 15,000 gross you cross into the 20% bracket. The 2026 brackets tax the first NIS 10,000 at 10% (NIS 1,000) and the next NIS 5,000 at 20% (NIS 1,000), so the pre-credit income tax is NIS 2,000 per month. The credit-point math now bites cleanly.
- Non-oleh single resident: NIS 2,000 - NIS 544.50 = approximately NIS 1,456 income tax. Take-home after income tax only is around NIS 13,544.
- Oleh Phase 1 (months 1-18): NIS 2,000 - NIS 1,270.50 = approximately NIS 730 income tax. Take-home after income tax only is around NIS 14,270.
- Oleh Phase 2 (months 19-30): NIS 2,000 - NIS 1,028.50 = approximately NIS 972 income tax. Take-home after income tax only is around NIS 14,028.
- Oleh Phase 3 (months 31-42): NIS 2,000 - NIS 786.50 = approximately NIS 1,214 income tax. Take-home after income tax only is around NIS 13,786.
At NIS 15,000 the full Phase 1 advantage versus a non-oleh colleague is NIS 726 a month - exactly the value of the 3 extra points. Across the 18 months of Phase 1 that compounds to roughly NIS 13,068 of extra take-home pay, close to an extra month of salary.
Salary: NIS 25,000 Gross a Month
At NIS 25,000 gross you are in the 31% bracket on the slice above NIS 19,000. The 2026 brackets stack as NIS 10,000 at 10% + NIS 9,000 at 20% + NIS 6,000 at 31% = NIS 2,800 + NIS 1,860 = approximately NIS 4,660 of pre-credit income tax.
- Non-oleh single resident: NIS 4,660 - NIS 544.50 = approximately NIS 4,116 income tax. Take-home after income tax only is around NIS 20,884.
- Oleh Phase 1 (months 1-18): NIS 4,660 - NIS 1,270.50 = approximately NIS 3,390 income tax. Take-home after income tax only is around NIS 21,610.
- Oleh Phase 2 (months 19-30): approximately NIS 3,632 income tax. Take-home after income tax only is around NIS 21,368.
- Oleh Phase 3 (months 31-42): approximately NIS 3,874 income tax. Take-home after income tax only is around NIS 21,126.
The Phase 1 advantage is the same NIS 726 a month in absolute terms - the points are worth a fixed shekel amount regardless of which bracket you sit in. As a percentage of take-home it shrinks at higher salaries; in absolute monthly shekels it does not.
What Credit Points Do Not Do
Credit points only move the Israeli income-tax line. The numbers above are מס הכנסה (Mas Hachnasa) before Bituach Leumi (national insurance), health levy, and your share of pension and Keren Hishtalmut. Those layers continue regardless of phase. As a separate olim benefit, Bituach Leumi waives the health contribution for the first six months after aliyah - that compounds with the credit-point relief in early Phase 1 to produce the very high "first year" נטו (Neto) figures olim often report.
For US-citizen olim, none of the above affects US tax. You still file a US return on worldwide income for life; you still file FBAR (FinCEN 114) once aggregate non-US accounts cross USD 10,000 at any point in the year; you still file FATCA Form 8938 above its own thresholds. Olim credit points reduce Israeli tax, which in turn reduces the foreign tax credit available to offset US tax - so a smaller Israeli bill can mean a slightly larger US residual bill. Get cross-border advice before assuming the Israeli saving lands in your pocket on the US side.
PFIC notice for US olim
One layer above does deserve a separate flag. The pension and קרן השתלמות (keren hishtalmut) contributions that sit on every Israeli payslip flow into pooled investment vehicles that hold equities, bonds, and other securities on behalf of many savers. From the perspective of US tax law, that pooling structure makes each of them likely to be classified as a Passive Foreign Investment Company (PFIC). PFIC status triggers a separate annual reporting regime on IRS Form 8621, with mark-to-market or excess-distribution computations and possible interest charges layered on top of the FBAR and FATCA filings already mentioned. The Israeli credit-point relief described on this page is correct as a matter of Israeli payroll tax, but the US side of pension and keren hishtalmut is not optional. Speak to a qualified US-Israel cross-border tax advisor before your first pension contribution clears and again before you opt into keren hishtalmut.
Planning the Step-Down at Month 19, 31, and 43
Because the schedule is graduated, your take-home falls in three predictable steps: roughly NIS 242 a month at the Phase 2 boundary (loss of 1 point), another NIS 242 at the Phase 3 boundary, and a final NIS 242 at the Phase 4 cliff when the schedule ends entirely. None of these are surprises; all three appear automatically on your payslip the month after you cross the boundary. The Olim Tax Calculator linked at the bottom of this page lets you model the entire 42-month curve for your specific salary.
FAQ
How much extra take-home do olim credit points give me at NIS 15,000 gross?
Approximately NIS 726 per month versus a non-oleh single resident on the same salary, during Phase 1 (months 1-18 from aliyah). That equals the value of the 3 extra points (3 × NIS 242). At NIS 15,000 gross your pre-credit income tax is roughly NIS 2,000 per month, so the credit fully bites without hitting the zero-tax ceiling.
Why does my colleague on the same salary report a different number?
Three reasons usually account for the gap. First, married or parent-of-a-child status adds extra base credit points unrelated to aliyah. Second, your colleague may be in a different phase of the 42-month schedule. Third, voluntary contributions (extra pension, Keren Hishtalmut beyond the default, donation receipts under Section 46) move the income-tax bill independently of credit points and change the visible take-home.
Do I get a refund for the credit-point relief I cannot use at a low salary?
No. The credit is non-refundable and does not carry forward to the next month or the next tax year. If your Israeli income-tax bill in a given month is smaller than the full credit value, the credit caps at the actual liability and the unused portion is permanently lost. This is the main reason starting work early in the 42-month window is more valuable than starting late.
Are olim credit points subtracted from US tax for US citizens?
No. Olim credit points reduce Israeli income tax only. US-citizen olim continue to file a US return on worldwide income; the credit-point relief reduces the Israeli tax that would otherwise be available as a foreign tax credit on the US return. The net effect on the US side depends on your specific FEIE/FTC position and is exactly the situation where cross-border advice pays for itself.
What happens to my take-home pay at month 43?
On your first payslip after month 42, you lose the last olim credit point. At a salary owing that much tax, that is approximately NIS 242 less take-home a month, on top of the two earlier step-downs at months 19 and 31. Total step-down from Phase 1 to post-schedule is up to NIS 726 a month of lost relief. Build the lower take-home into your budget before month 43, not after.
Does the schedule start from my aliyah date or my employment date?
From your aliyah date as it appears on your תעודת עולה (Teudat Oleh) (new-immigrant certificate), not from when you started working. Months in which you do not earn taxable Israeli income (for example, an unpaid ulpan period) still count toward the 42-month clock - so the relief is irrecoverable if you delay paid work.
Next Step: Model Your Own Curve
The Olim Tax Calculator linked under this article applies the 2026 brackets, the NIS 242 credit-point value, and the full 3-2-1 schedule to your salary and aliyah date. Run it once now to see the Phase 1 number, and once for each step-down month so the lower take-home is in your budget before it lands on your payslip.
