Does Israel use progressive tax brackets?
AI Answer
Yes, Israel uses a progressive income tax system where higher portions of income are taxed at higher rates. The top marginal rate is 50.0%. This means your effective (average) rate is always lower than the top bracket rate.
For 2024, the tax brackets are: 10% on income up to ILS 84,120, 14% on income between ILS 84,121 and ILS 120,720, 20% on income between ILS 120,721 and ILS 193,800, 31% on income between ILS 193,801 and ILS 269,400, 47% on income between ILS 269,401 and ILS 698,280. Income above ILS 698,280 is taxed at 50%.
Additionally, there’s an "income surtax" of 3% for annual income exceeding ILS 721,560, effectively pushing the top rate to 50%. This structure ensures that only the portion of income falling into a higher bracket is taxed at that higher rate.
When considering a move, understand that your take-home pay in Israel will be significantly impacted by these progressive rates. Always factor in your specific income level to estimate your actual tax burden.