Israel Income Tax Rates 2026: Personal, Corporate and Capital Gains Tax

An overview of Israeli tax rules for individuals, residents, non-residents and companies, including income tax brackets, tax credits, investment income and tax reporting.

Legal framework and tax residency

The principal legislation is the Israeli Income Tax Ordinance [New Version], 1961. Under sections 2 and 2A, income and gains are generally taxed by source and residence, subject to exemptions and treaties. Israeli tax residents are generally taxed on worldwide income, whereas non-residents are generally taxed on Israeli-source income.

Section 1 applies a centre-of-life test to individual residence, taking account of family, economic and social connections. Rebuttable presumptions generally apply where an individual spends at least 183 days in Israel during a tax year, or at least 30 days in that year and 425 days in total over that year and the two preceding years. Days alone do not conclusively establish residence.

Official references: Israel Tax Authority income tax information and residency and source-of-income explanations.

Individual income tax rates in 2026

Section 121 of the Ordinance establishes progressive individual income tax rates. For earned income, the statutory marginal rates generally progress through 10%, 14%, 20%, 31%, 35% and 47%. The 2026 tax-bracket widening changed the boundaries of the 20% and 31% bands. The following is an indicative monthly schedule for employment or business income, before credits and applicable surtax.

The table is a general guide and does not replace the official tax-year schedule. Some non-earned income has different bracket treatment. High incomes may also attract additional tax under section 121B.

See the Knesset explanation of the 2026 bracket changes and the Tax Authority 2026 income tax guide.

Personal tax credits and new immigrants

Tax credit points reduce the income tax otherwise payable, rather than reducing gross salary. Israeli residents ordinarily qualify for basic resident credit points; additional points may apply for women, children, single parents, education, military service and other statutory circumstances. The value of a point and eligibility rules are year-specific.

New immigrants (olim) and qualifying returning residents may receive further relief under sections 14 and 35 and other provisions. The length and conditions of relief depend on immigration date and the type and source of income; certain 2026 temporary measures may also apply. Employees normally provide relevant information to employers using Form 101.

Check the official credit-point calculator and official immigrant tax-benefits guide.

Income tax for non-residents

A non-resident may owe Israeli tax on salary for work performed in Israel, Israeli business profits, rent, interest, dividends or gains sourced in Israel, as determined under sections 2, 4A and relevant treaty provisions. Withholding, exemptions, permanent-establishment rules and treaty relief can change the result. A non-resident is not automatically entitled to the same personal credits as a resident.

Tax on interest, dividends and capital gains

Interest income

Under section 125C and related rules, many types of interest earned by individuals are subject to a 15% or 25% rate, depending on the instrument and indexation. Exceptions, exemptions, surtaxes and special circumstances apply.

Dividend income

Section 125B generally provides a 25% individual dividend tax rate, rising to 30% for a substantial shareholder, generally one holding at least 10% of a specified means of control. Applicable surtax and treaty rules can affect the final charge.

Capital gains

Part E of the Ordinance, including sections 88 and 91, regulates capital gains. Many individual real capital gains are taxed at 25%, or 30% for substantial shareholders, subject to transitional rules, exemptions and surtax. Israeli real estate is subject to a separate land-tax regime under the Land Taxation (Appreciation and Acquisition) Law, 1963.

Investment taxation depends on the type of asset, the taxpayer and the timing of the gain; a single flat rate cannot describe every case.

Corporate income tax in Israel

Under section 126(a), the ordinary Israeli corporate income tax rate is 23%. An Israeli-resident company is generally taxed on worldwide taxable profits; a non-resident company is generally taxed on Israeli-source profits, subject to treaty rules. Eligible preferred enterprises and technology companies may qualify for reduced rates under the Law for the Encouragement of Capital Investments, 1959.

For historical context, the standard corporate rate was 24% in 2017 and 23% from 2018. See the Tel Aviv-Yafo municipal investment and tax incentives guide.

Tax returns, withholding and tax coordination

Annual filing obligations depend on the taxpayer's income, business activities, foreign assets and applicable exemptions. Marriage does not create an unrestricted choice between joint and separate filing: special rules govern spouses' reporting and tax computations. Employers generally withhold income tax from wages; individuals with multiple employers or other income may need tax coordination.

Use the official online tax coordination service. National insurance and health insurance contributions are separate from income tax; see the National Insurance Institute's 2026 employee contribution rates.

Official resources and important qualifications

For binding tax treatment, consult the current Income Tax Ordinance, implementing regulations, Tax Authority circulars and any relevant double-tax treaty. The precise taxable base, annual thresholds, additional tax, exemptions and filing requirements vary with the facts. This article is general information and not individualized tax advice.

Last reviewed: 23 October 2026.