This analysis outlines the framework for individual income tax in Israel for 2025. The following guide details the progressive tax structure, current brackets, supplementary surtaxes, and practical considerations for resident and non-resident taxpayers operating in the country. All data is drawn directly from official Israeli tax policy documentation for the current assessment year.
Overview of Israel’s Individual Income Tax Framework
In Israel, individual income tax is assessed on a progressive basis. Personal taxable income is subject to escalating tax rates depending on the total annual income reported. Income is denominated in Israeli New Shekel (ILS), and tax liability is determined according to national reporting and assessment mechanisms. The following table summarises the Israeli tax brackets in force for 2025.
Israel Individual Income Tax Brackets – 2025
| Income Range (ILS) | Income Range (USD) (conversion at 1 ILS = $0.28 USD) |
Rate (%) |
|---|---|---|
| ₪0 – ₪84,120 | $0 – $23,554 | 10% |
| ₪84,120 – ₪120,720 | $23,554 – $33,802 | 14% |
| ₪120,720 – ₪193,800 | $33,802 – $54,264 | 20% |
| ₪193,800 – ₪269,280 | $54,264 – $75,398 | 31% |
| ₪269,280 – ₪560,280 | $75,398 – $156,878 | 35% |
| ₪560,280 – ₪721,560 | $156,878 – $202,037 | 47% |
| Over ₪721,560 | Over $202,037 | 50% |
As this table demonstrates, Israel’s system is sharply progressive, with higher earners taxed at significantly increased marginal rates. Only the portion of annual income within each band is subject to its corresponding tax rate.
Surtaxes on High Incomes and Capital
In addition to the standard progressive brackets, Israeli tax policy imposes surtaxes for high earners, further elevating the effective tax load at upper thresholds. These are applied as follows in 2025:
| Surtax Condition | Additional Rate (%) |
|---|---|
| Annual taxable income (all sources) over ₪721,560 ($202,037) | 3% |
| Annual taxable income from capital sources over ₪721,560 ($202,037) | 2% |
These surtaxes are layered on top of the main income brackets—meaning the absolute marginal tax rate for affected individuals may exceed those listed in the primary bracket table above. Surtax applicability depends on the source and nature of income, with capital gains attracting additional scrutiny.
Application and Basis of Assessment
The Israeli tax year corresponds to the calendar year. Individuals are assessed on total worldwide income, which includes salaries, business profits, property income, and various forms of capital gains. The comprehensive basis of assessment means residency status and global earnings both impact liability.
Progressive rates apply to the total taxable income after deductions and exemptions, if any. Official figures for certain deductible items and thresholds may be updated annually or subject to specific personal circumstances.
Summary of Israel’s Individual Tax Rates and Surtaxes
- Assessment type: Progressive on total individual income
- Currency used: Israeli New Shekel (ILS)
- Brackets: Seven, with rates from 10% up to 50% as outlined above
- Surtaxes: Up to 3% on very high incomes and 2% on capital income above certain thresholds
- Basis: Worldwide income for residents
Pro Tips for Managing Israeli Individual Income Tax in 2025
- Ensure comprehensive documentation of all income sources, both in Israel and internationally, as global income is reportable for tax residents.
- Monitor income thresholds closely during the year, as surpassing ILS 721,560 ($202,037) may trigger significant surtaxes and impact overall effective rates.
- Structure capital gains and withdrawals from investment accounts with attention to capital surtax thresholds to optimize long-term liabilities.
- Review eligibility for allowable deductions and credits annually to ensure accurate assessment against taxable income.
- Consult official Israeli tax resources, such as the Israel Tax Authority, to remain current with yearly updates and ensure compliance with local regulations.
Accessing Official Resources
For ongoing updates, forms, and authoritative guidance, refer directly to the Israel Tax Authority. This is the primary channel for policy changes, submission requirements, and resident/non-resident clarifications.
In summary, Israel’s personal income tax structure for 2025 is one of the more progressive regimes internationally, with top marginal rates combined with surtaxes targeting upper-income brackets and capital earnings. Attention to income thresholds and clear documentation are vital for efficient compliance. For those with substantial worldwide income, anticipatory planning around Israel’s detailed tax bands and supplemental surtaxes is essential for effective tax management.