The Gap That Surprises Every New Employee
When you negotiate a salary in Israel, the number discussed is almost always ברוטו (Bruto) — your gross, before any deductions. What actually lands in your bank account is your נטו (Neto) — which can be significantly lower. Understanding where the gap goes is one of the most important things you can do when starting work in Israel.
Worked Example: 15,000 NIS Gross
Let's walk through a realistic example for an employee earning 15,000 NIS gross per month in 2025, with the standard 2.25 tax credit points (resident) plus olim credit points typical for the first year.
Deductions from Your Pay
- מס הכנסה (Mas Hachnasa) (Income Tax): approximately 1,200-1,600 NIS. The exact amount depends on how many tax credit points you have — olim get extra points in their first 42 months, which meaningfully reduce this figure.
- Bituach Leumi (National Insurance): approximately 680 NIS — employee share only (roughly 3.5% on the first 7,000 NIS bracket, 7% above).
- Hetel Briut (Health Levy): approximately 370 NIS — 3.1% on the first bracket, 5% above. Funds your Kupat Cholim membership.
- Pension Employee Contribution: 900 NIS — 6% of gross. This is your money going into your pension fund, not a tax.
- Keren Hishtalmut Employee Contribution: 375 NIS — 2.5% of gross. Again, your money going into a savings fund you control.
Total deductions from your pay: approximately 3,525-3,925 NIS
Estimated net take-home: approximately 11,075-11,475 NIS
The Crucial Distinction: Taxes vs Savings
Not all deductions are losses. Of the roughly 3,700 NIS deducted in this example, only about 2,250 NIS goes to the government (income tax + Bituach Leumi + health levy). The remaining ~1,275 NIS goes into your own pension and Keren Hishtalmut — savings you own and will eventually access.
This is an important reframe: your effective tax burden on 15,000 NIS gross is closer to 15%, while your total deduction rate (including savings) is around 25%.
Income Tax Brackets (2025)
Israel uses progressive tax rates across seven brackets:
- Up to 7,010 NIS/month: 10%
- 7,011–10,060 NIS/month: 14%
- 10,061–16,150 NIS/month: 20%
- 16,151–22,440 NIS/month: 31%
- 22,441–46,640 NIS/month: 35%
- 46,641–60,130 NIS/month: 47%
- Above 60,130 NIS/month: 50%
Your employer applies your tax credit points before withholding, which is why two employees on the same gross can have different income tax deductions on their payslips.
What Changes Over Time
As your salary grows, both the income tax rate and Bituach Leumi jump at certain thresholds — this is why a 10% pay rise doesn't mean a 10% increase in net pay. At the same time, as you accumulate years of service, your pension pot and Keren Hishtalmut grow, building long-term wealth even as monthly deductions remain similar.