The short answer
In Israel, ברוטו (bruto) is the number on the offer letter and נטו (neto) is the number that lands in your bank account. The gap is roughly 22-30% for most olim in 2026, but only about three-fifths of it is real tax. The rest is mandatory savings that stay in accounts you own. The gap, the brackets, and the ceilings are all set by Israeli statute, so the same gross produces close to the same neto regardless of employer1.
Cross-border disclaimer
PFIC notice for US olim
If you are a US citizen or green-card holder, the two savings lines on your Israeli payslip deserve attention before you sign anything. Israeli pension funds (קרן פנסיה (keren pensia)) and קרן השתלמות (keren hishtalmut) are 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 that the Israeli tax treatment alone does not handle7. The Israeli payroll deductions described on this page are correct as a matter of Israeli law, but the US side of your return is not optional. Speak to a qualified US-Israel cross-border tax advisor before your first contribution clears, ideally in the same conversation where you choose your pension provider and whether to opt in to keren hishtalmut.
What comes out of your gross, line by line
Israeli payslips itemise five recurring deductions on top of any voluntary items. Three of them are tax; two are savings you own.
| Line on payslip | What it is | Tax or savings? | 2026 employee rate |
|---|---|---|---|
| מס הכנסה (mas hachnasa) (income tax) | Progressive tax on your gross, less credit points | Tax | 10% on the first NIS 10,000 a month, rising in five brackets to 47%1 |
| Bituach Leumi (national insurance) | Funds old-age, disability, maternity, unemployment | Tax | 1.04% up to NIS 7,703 / month; 7% from NIS 7,703 up to NIS 51,9103 |
| Mas Briut (health levy) | Funds your Kupat Cholim sick-fund coverage | Tax | 3.23% up to NIS 7,703 / month; 5.17% from NIS 7,703 up to NIS 51,9103 |
| Pension employee contribution | Your money flows into a pension account you own | Savings | Typically 6% of gross (mandatory minimum)5 |
| קרן השתלמות (keren hishtalmut) | Tax-advantaged six-year savings account | Savings | Typically 2.5% of gross when offered by the employer |
The 2026 income-tax brackets
The 2026 reform widened the lower brackets and removed a separate 14% rung that existed in prior years. Brackets are stated monthly; the annual figure is twelve times the monthly cap.
- 10% on monthly income up to NIS 10,000
- 20% on monthly income from NIS 10,001 to NIS 19,000
- 31% on monthly income from NIS 19,001 to NIS 25,100
- 35% on monthly income from NIS 25,101 to NIS 60,130
- 47% on monthly income above NIS 60,130
- Plus a separate 3% surtax (mas yasaf, מס יסף) on total annual taxable income above NIS 721,560 (12 times NIS 60,130), which is equivalent to a 50% effective top rate6
Above each bracket boundary, only the slice of salary inside that bracket is taxed at the higher rate. A NIS 22,000 gross earner is not paying 31% on the whole salary; the first NIS 10,000 is at 10%, the next NIS 9,000 at 20%, and only the remaining NIS 3,000 sits in the 31% bracket.
The two ceilings that matter
Bituach Leumi and the health levy run two-step. Below the reduced-rate threshold of NIS 7,703 a month, the combined rate is 4.27%. Above NIS 7,703, the combined rate jumps to 12.17%, but only up to the hard ceiling of NIS 51,910 a month3. There is no Bituach Leumi or health-levy deduction at all on the slice above NIS 51,910, which is why very high earners feel less of a step than mid earners do at the threshold.
Worked example 1: NIS 12,000 gross a month (entry-level oleh)
Single oleh, 18 months after aliyah, default 2.25 resident credit points plus 1 oleh point in the current phase, so 3.25 points total at NIS 242 each.
- Income tax before credits: NIS 1,000 (first NIS 10,000 at 10%) + NIS 400 (next NIS 2,000 at 20%) = NIS 1,400
- Credit-point relief: 3.25 × NIS 242 = NIS 786.50
- Income tax after credits: NIS 1,400 - NIS 786.50 = NIS 613.50
- Bituach Leumi: 1.04% × NIS 7,703 + 7% × NIS 4,297 = NIS 80 + NIS 301 = NIS 381
- Health levy: 3.23% × NIS 7,703 + 5.17% × NIS 4,297 = NIS 249 + NIS 222 = NIS 471
- Pension at 6% and keren hishtalmut at 2.5%: NIS 720 + NIS 300 = NIS 1,020
Total deductions about NIS 2,486. Take-home about NIS 9,514. Of that, roughly NIS 1,466 is tax to the state (income tax + Bituach Leumi + health) and roughly NIS 1,020 is your own savings.
Worked example 2: NIS 25,000 gross a month (experienced professional)
Single oleh past the 42-month olim window, 2.25 resident credit points only.
- Income tax before credits: NIS 1,000 (first NIS 10,000 at 10%) + NIS 1,800 (NIS 9,000 at 20%) + NIS 1,891 (NIS 6,100 at 31%) = NIS 4,691
- Credit-point relief: 2.25 × NIS 242 = NIS 544.50
- Income tax after credits: about NIS 4,146
- Bituach Leumi: 1.04% × NIS 7,703 + 7% × NIS 17,297 = NIS 80 + NIS 1,211 = NIS 1,291
- Health levy: 3.23% × NIS 7,703 + 5.17% × NIS 17,297 = NIS 249 + NIS 894 = NIS 1,143
- Pension and keren hishtalmut at 6% + 2.5%: NIS 1,500 + NIS 625 = NIS 2,125
Total deductions about NIS 8,705. Take-home about NIS 16,295. Notice how the 31% bracket kicks in for the last NIS 6,100 only, not the whole salary.
What changes for a US-citizen oleh
None of the Israeli math above changes if you are a US person, but the US side does not stop. US citizens and green-card holders file a US 1040 on worldwide income for life, regardless of Israeli tax residency. The US-Israel income-tax treaty plus the Foreign Earned Income Exclusion and Foreign Tax Credit usually wipe out double tax on salary, but the filing duty persists, and FBAR plus FATCA reporting still apply on any non-US accounts. None of that shows on your Israeli payslip.
A note on the first 18 months for new olim
For roughly the first six months after aliyah, Bituach Leumi waives the new immigrant health-insurance contribution4. After that, both the national insurance and health components appear in full. Credit-point relief is the larger and longer-lasting newcomer benefit: the schedule of extra points runs across the first 42 months from aliyah, on a descending pattern (more points in the early months, fewer later)2.
Bruto is what you negotiated; neto is what you receive. The gap is set by Israeli statute (income tax, Bituach Leumi, health levy, and forced pension and keren hishtalmut savings). Most olim see a 22-30% gap, but about a third of it is savings you own, not tax.
Cost to employer (sometimes called total CTE) is your bruto plus the employer contributions on top: roughly 6.5% to 7.5% pension, 7.5% severance, 3.34% Bituach Leumi at lower bracket and up to 7.6% above, plus optional keren hishtalmut at 7.5%. A NIS 20,000 bruto often costs the employer NIS 25,000 to NIS 27,000. Always negotiate in bruto unless explicitly told otherwise.
Yes, in 2026 each credit point reduces monthly income tax by NIS 242 regardless of bracket, capped at zero income tax. It is a flat shekel value, not a percentage, which is why the same number of points is worth more proportionally to a lower earner2.
Once your annual taxable income, including capital gains and bonuses, crosses NIS 721,560 (12 times NIS 60,130)6. For most salaried olim it is not a factor, but a large vesting event or end-of-year bonus can push a single year past the threshold.
Once you are Israeli tax-resident, Israel can tax worldwide income, but the ten-year exemption for new and returning residents removes Israeli tax on most foreign-source income during the window. Salary earned for work physically performed in Israel is Israeli-source and falls outside the exemption regardless of where it is paid. The home country may still tax under its own rules.
Income-tax withholding starts on payslip one. The Bituach Leumi health component may be partly waived for the first six months from aliyah under the new immigrant exemption4. Your payroll administrator needs the aliyah date on file to apply the waiver, so confirm they have it.
Pension is mandatory under Israeli law for almost every employee after a short qualifying period5. Keren hishtalmut is contractual, not statutory; some employers offer it and some do not. Opting out of pension is usually not permitted; opting out of keren hishtalmut is possible if it is part of the employment package, but you would lose the matching employer contribution and the six-year tax shelter that comes with it.
