Income Tax Brackets (Mas Hachnasa)

How Progressive Tax Brackets Work

This is educational content, not tax advice. For your personal situation, consult a licensed Israeli tax accountant.

מס הכנסה (Mas Hachnasa) in Israel is progressive — meaning different portions of your income are taxed at different rates. A common misconception is that earning more can push you into a higher bracket and reduce your take-home pay. That can't happen. Each bracket only applies to the income within its range. Earning more always leaves you better off.

The 2026 Tax Brackets (Monthly Income)

Israeli income tax is calculated on a monthly basis for employed workers. The 2026 brackets are:

Monthly income (NIS)	Tax rate
0 – 7,380	10%
7,381 – 10,140	14%
10,141 – 16,980	20%
16,981 – 24,660	31%
24,661 – 51,360	35%
51,361 – 67,920	47%
Above 67,920	50%

These brackets are updated annually (usually in January) for inflation. Annual brackets are simply the monthly figures multiplied by 12.

Worked Example: 15,000 NIS/Month Gross

Let's say your monthly ברוטו (Bruto) (gross salary) is 15,000 NIS. Here's how the tax is calculated before credit points:

First 7,380 NIS × 10% = 738 NIS
Next 2,760 NIS (7,381–10,140) × 14% = 386 NIS
Next 4,860 NIS (10,141–15,000) × 20% = 972 NIS

Total tax before credit points: 2,096 NIS. Assuming the standard 2.25 credit points for a male employee (≈ 545 NIS/month credit in 2026), the actual tax withheld would be approximately 1,551 NIS — giving you a נטו (Neto) (net) of around 13,449 NIS before national insurance and health contributions.

Worked Example: 30,000 NIS/Month Gross

For a higher earner at 30,000 NIS/month gross:

First 7,380 NIS × 10% = 738 NIS
Next 2,760 NIS × 14% = 386 NIS
Next 6,840 NIS × 20% = 1,368 NIS
Next 7,680 NIS × 31% = 2,381 NIS
Next 5,340 NIS (24,661–30,000) × 35% = 1,869 NIS

Total tax before credit points: 6,742 NIS. After standard credit points, approximately 6,197 NIS. The effective tax rate on this salary is about 20.7% — significantly lower than the headline 35% bracket rate.

Your Effective Rate vs. Marginal Rate

The marginal rate is the rate that applies to your next shekel of income. The effective rate is the percentage of your total income that goes to tax. Because of the progressive structure, effective rates are always lower than the marginal rate. Most middle-income earners in Israel have effective income tax rates in the 12–22% range before national insurance contributions.

The US federal tax brackets work identically — progressive bands where each rate applies only to income in that range. The key differences: US brackets are much wider (the 22% bracket covers income up to $89,075 for single filers in 2026), and you also owe FICA (Social Security + Medicare at 7.65%) on top. Israel's Bituach Leumi contributions play a similar role to FICA. One important note: Israeli brackets are set monthly and apply to each month independently, while US brackets apply annually and true up via your tax return.

What Comes Out of Your Payslip Besides Income Tax

Income tax is not the only deduction from your gross salary. You'll also see deductions for:

Bituach Leumi (National Insurance) — your employee contribution is 0.4%–7% depending on your income level
Hetel Briut (Health Levy) — 3.1%–5% funding your Kupat Cholim
Pension contributions — mandatory 6% employee contribution

Together with income tax, these bring the total deduction from gross to roughly 25–35% for most middle-income earners, depending on salary and family situation.