The Quick Answer
An Israeli תלוש משכורת (tlush maskoret) (payslip) lists, from top to bottom, your gross ברוטו (bruto), then four distinct deductions (מס הכנסה (mas hachnasa) income tax, ביטוח לאומי (bituach leumi) national insurance, היטל בריאות (hetel briut) health tax, and your share of pension plus קרן השתלמות (keren hishtalmut)), then your net נטו (neto), then a section below the line listing what your employer pays on top of your gross into your pension and keren hishtalmut. Olim in their first three and a half years get extra נקודות זיכוי (nekudot zikui) (tax credit points) worth 242 ILS each per month in 20261.
General information, not advice. This is general information, not tax, legal, or financial advice. Cross-border (US/UK) and Israeli tax interact in complex ways, and FATCA, FBAR, and PFIC consequences for US-citizen olim can be financially severe. Consult a qualified cross-border professional before relying on payslip-derived figures for a US, UK, Canadian, or South African return.
Why your payslip looks dense compared to home
The first Israeli payslip lands as a Hebrew PDF with twenty or thirty line items and almost no plain-language summary. That is not a translation problem; Israeli payslips really do carry far more lines than a US pay stub or a UK payslip, because Israeli employment law requires the employer to surface every component on every single payslip rather than rolling them into year-end summaries. The Wage Protection Law (Chok Hagant Hasachar) mandates a fully itemized payslip every month1, and the items below are not editorial choices, they are statutory.
The 2026 deduction rate sheet
Before walking the payslip line by line, the table below pins the rates the calculations on your tlush depend on for calendar year 2026. Bituach Leumi, hetel briut, and the income-tax brackets are updated by the Israeli government in January each year against CPI and average-wage data, so re-check these figures the following January before relying on them3.
| Line item | 2026 rate | Threshold / cap |
|---|---|---|
| Mas hachnasa bracket 1 | 10 percent | On monthly income up to 10,000 ILS |
| Mas hachnasa bracket 2 | 20 percent | 10,001 to 19,000 ILS |
| Mas hachnasa bracket 3 | 31 percent | 19,001 to 25,100 ILS |
| Mas hachnasa bracket 4 | 35 percent | 25,101 to 60,130 ILS |
| Mas hachnasa bracket 5 | 47 percent | Above 60,130 ILS |
| Mas yasaf surtax | +3 percent | On monthly income above 60,130 ILS |
| Bituach leumi: employee share (low band) | 1.04 percent | On gross up to 7,703 ILS per month |
| Bituach leumi: employee share (high band) | 7 percent | 7,703 to 51,910 ILS; nothing above the ceiling |
| Hetel briut: employee health tax (low band) | 3.23 percent | On gross up to 7,703 ILS per month |
| Hetel briut: employee health tax (high band) | 5.17 percent | 7,703 to 51,910 ILS; nothing above the ceiling |
| Mandatory pension: employee share | 6 percent | Of gross, up to the pension contribution ceiling |
| Mandatory pension: employer share | 6.5 percent + 8.33 percent severance | Total 14.83 percent of gross paid above your salary |
| Keren hishtalmut: employee share | 2.5 percent (typical) | Contractual; not statutorily mandatory |
| Keren hishtalmut: employer share | 7.5 percent (typical) | Up to the annual tax-exempt ceiling |
| Nekudat zikui value (monthly) | 242 ILS | Each credit point reduces tax by this amount per month |
The earnings section line by line
Schar yesod (שכר יסוד), base salary. Your contractual monthly wage. Every other earnings line and every deduction percentage is calculated against this or a related base.
Sh'ot nosafot (שעות נוספות), overtime. Hours past the legal daily or weekly cap, paid at premiums of 125 percent for the first two extra hours and 150 percent thereafter under Israeli labor law. Always taxable.
Dmei nesia (דמי נסיעות), travel reimbursement. Commuting reimbursement paid up to a daily cap set by collective agreement. It appears in your earnings column but is not part of the gross figure used to compute mas hachnasa1. Two line items that look identical are taxed differently: this is one of them.
Mtanot (מתנות), gifts, or havraah (הבראה), recreation pay. A small annual recreation supplement, paid usually in summer. Havraah is taxable; certain gift-day items are partially exempt.
Bonus / premia (פרמיה / בונוס). Performance compensation. Fully taxable as ordinary income at your marginal mas hachnasa rate.
The deduction section line by line
Mas hachnasa (מס הכנסה), income tax. Israel runs a five-bracket progressive system in 2026 starting at 10 percent and climbing to 47 percent1, with a 3 percent surtax (mas yasaf) on monthly income above 60,130 ILS for a top effective rate of 50 percent. Your employer applies your נקודות זיכוי (nekudot zikui) (tax credit points) directly against the gross tax before deducting from your pay. New olim get extra credit points on top of the baseline 2.25 points every resident gets, declared on annual Form 1018. The extra-point schedule for olim is stepped: roughly 3 extra points in the first 18 months after aliyah, then 2 extra for the next 12 months, then 1 extra for the next 12 months2. Worth checking your tlush in each transition month: every point at the 2026 monthly value of 242 ILS reduces your tax bill by 242 ILS per month.
Bituach leumi (ביטוח לאומי), national insurance. The employee-share line. For 2026 it is 1.04 percent of gross below the 7,703 ILS monthly threshold and 7 percent of gross between 7,703 and the monthly ceiling of 51,910 ILS3. Above the ceiling no further bituach leumi is deducted. There is no US Social Security totalization agreement with Israel, which means US-citizen olim who pay both US Social Security (self-employed) and Israeli bituach leumi cannot offset one against the other6. For salaried US-citizen olim, only Israeli bituach leumi applies because the US system taxes employees only on US-source wages.
Hetel briut (היטל בריאות), health tax. Funds your kupat cholim membership and the universal public health insurance system. 3.23 percent of gross below the 7,703 ILS monthly threshold and 5.17 percent above, up to the same monthly ceiling3. Both bituach leumi and hetel briut are collected by Bituach Leumi but they are conceptually and legally separate.
Pensia oved (פנסיה עובד), employee pension share. 6 percent of your gross (more under some collective agreements), deducted from your salary and deposited directly into your designated pension fund. Mandatory pension enrollment from your first day under the Pension Extension Order4. This is your money flowing into a long-term savings vehicle, not a tax.
Keren hishtalmut oved (קרן השתלמות עובד), employee study-fund share. Typically 2.5 percent of gross, also deducted from your salary, going into a six-year study-fund account. Tax-free on withdrawal after the six-year hold period (or earlier for professional development), subject to the annual contribution cap4. Not statutorily mandatory; included in most full-time employment contracts.
Below the net: the employer-cost block
Below the net total a second block lists what your employer pays into your savings vehicles on top of your gross. These do not reduce your net bank deposit and they are not taxes; they are deferred compensation owned by you, sitting in your pension and keren hishtalmut accounts.
- Pensia maavid (פנסיה מעביד), employer pension. Typically 6.5 percent of your gross flowing into your pension fund, plus a separate 8.33 percent earmarked as severance (pitsuyim) that becomes accessible if you are dismissed or retire4.
- Keren hishtalmut maavid (קרן השתלמות מעביד), employer study fund. Up to 7.5 percent of your gross, up to the annual tax-exempt ceiling, deposited into your keren hishtalmut account4.
Add the two employer contributions to your gross and you get your total monthly compensation cost to the employer, which is also the number to negotiate against when comparing two offers. A 20,000 ILS gross with employer pension and keren hishtalmut is roughly a 24,300 ILS total compensation package; a 22,000 ILS gross without keren hishtalmut at all is roughly 23,300 ILS. Compare totals, not gross.
PFIC reality for US-citizen olim
For US-citizen olim, Israeli pension funds and keren hishtalmut accounts are non-US pooled investment vehicles, which means they fall into the IRS Passive Foreign Investment Company (PFIC) regime under IRC sections 1291 to 12985. The default treatment under IRC section 1291 taxes distributions and gains at the highest historic ordinary rate plus an interest charge; alternative elections (qualified electing fund, mark-to-market) require annual Form 8621 filings with specific information that Israeli funds rarely provide in the required US format.
Two practical points temper this for salaried olim:
- Employer pension is generally tolerated. US tax practice for employer-mandatory pension funds treats them more permissively in many cases than voluntary investments; the US-Israel tax treaty does not directly address PFIC for pension funds, but professional consensus is that employer-mandatory enrollment is rarely the worst PFIC exposure a US-citizen oleh has. Form 8621 may still apply; ask a cross-border accountant before your first US filing.
- Keren hishtalmut is more exposed and is often negotiable. Where keren hishtalmut is contractually optional, US-citizen olim sometimes negotiate to substitute the employer keren hishtalmut percentage into salary or into an employer-paid US-domiciled arrangement. The trade-off is the Israeli tax-free six-year withdrawal benefit against the US PFIC reporting and tax friction. There is no single right answer; the calculus depends on planned years in Israel, marginal US tax bracket, and the employer's willingness to restructure.
FBAR (FinCEN 114) reporting7 applies regardless of PFIC: the aggregate balance of your pension, keren hishtalmut, and Israeli bank accounts crossing 10,000 USD at any point in the year triggers the filing. UK, Canadian, and South African olim are not in PFIC and not in FBAR; CRS reporting from the Israeli pension manager to the home-country tax authority replaces them.
Frequently Asked Questions
Why is my net pay lower than the rough 70 percent rule says it should be?
The most common cause for new olim is missing nekudot zikui on Form 101. If your employer has not received your signed Form 101 declaring your status and credit points8, the payroll system applies the baseline 2.25 points and skips the extra oleh points entirely, costing roughly 484 to 726 ILS per month in over-withholding depending on which year of aliyah you are in. The fix is to submit Form 101 immediately; prior over-withholding becomes a refund at year-end through the annual return.
What is the difference between bituach leumi and hetel briut?
Bituach leumi funds the Israeli social-insurance system: maternity, disability, unemployment, child allowances, old-age pension. Hetel briut is the dedicated health-tax line that funds your kupat cholim membership under the National Health Insurance Law3. Both are collected by the National Insurance Institute, but they finance different statutes and they sit on different lines of your payslip with different rates.
If my employer pays 6.5 percent into my pension, why does the payslip also show me paying 6 percent?
The mandatory pension scheme under the Pension Extension Order is funded by both sides: the employee deducts 6 percent from gross and the employer pays an additional 6.5 percent out of pocket plus a further 8.33 percent earmarked for severance4. The total going into your pension account each month is 12.5 percent of your gross plus the severance earmark. The two-sided structure is by statute, not negotiation.
I am a US citizen. Should I opt out of keren hishtalmut to avoid PFIC?
Not without a cross-border conversation. The keren hishtalmut tax-free withdrawal after six years is a meaningful Israeli benefit; PFIC reporting friction and the punitive default tax method on US returns are a meaningful US cost. The right answer depends on your marginal US bracket, how many years you expect to remain in Israel, and whether your employer can restructure the keren hishtalmut percentage into other compensation5. Get an opinion from a US-Israel cross-border accountant before signing your contract.
Does the 10-year foreign-income exemption affect my Israeli payslip?
No. The new-resident 10-year exemption applies to non-Israeli-source income (foreign rental, foreign dividends, foreign-employer salary). Your Israeli employer's wages are Israeli-source income from day one of work and are fully taxable in Israel at the standard brackets and rates shown on your payslip2. The exemption does not change anything visible on your tlush.
What does the surtax line (mas yasaf) on a high-income payslip mean?
Israel applies a 3 percent surtax on monthly income above 60,130 ILS in 2026, on top of the standard 47 percent top bracket1. The effective top combined rate is 50 percent. On most olim payslips below that threshold the line does not appear; on senior- management payslips it shows as a separate sub-line at the bottom of the deductions block.
How do I sanity-check my payslip against employer fraud or system error?
Three checks each month. First, the net figure on the payslip must match the credit to your bank account to the agora. Second, the year-to-date column should add up cleanly across twelve months at year-end. Third, run the gross through the 2026 brackets and rates above as a back-of-envelope check; if your net comes out more than a few hundred ILS lower than the bracketed estimate after accounting for credit points, raise it with payroll the same week. Errors are common in the first three months after a hire or after a salary change, especially for olim whose Form 101 is processed late.
Next step
With the line items mapped, the next question is the structural one: where, exactly, does the gap between your bruto and your neto go, and how much of it is actually money leaving your control versus deferred compensation flowing into your own savings accounts? Read the next article in this series to walk through bruto-to-neto on a worked example.
