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OrdinanceTax Law

Income Tax Ordinance [New Version]

פקודת מס הכנסה [נוסח חדש]

Published: 1961-04-25Last amended 2026-06-08✓ Amendment status checked against the Knesset legislation record on 2026-09-04
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Chapter III: Deductions, Credits and Children's Allowances

Definitions§

33a.

In this Chapter –

"credit point" – an amount of NIS 504 for a tax year, linked to the index as referred to in section 120a, which is offset against the tax for that year;

"pension point" – an amount equal to the amount of a credit point as at its value on the 21st day of Tevet 5757 (31 December 1996), as adjusted in accordance with the provisions of section 120b with respect to a pension point and divided by twelve.

Credit for Resident of Israel§

34.

In computing the tax of an individual who was a resident of Israel in the tax year, two credit points shall be taken into account.

Credit for New Immigrant§

35.
(a)In computing the tax of a new immigrant, the following shall be taken into account —
(1)1/12 of a credit point for each month of the first twelve months from his immigration to Israel;
(1a)1/4 of a credit point for each month of the eighteen months following them;
(2)1/6 of a credit point for each month of the twelve months following them;
(3)1/12 of a credit point for each month of the twelve months following them.
(b)In computing the tax of a registered spouse whose taxable income includes the income of his or her spouse who is a new immigrant, and the tax on their income is computed jointly, the credit points referred to in subsection (a) shall be taken into account, provided that if the income of the spouse who is not the registered spouse does not exceed an amount equal to five times the amount of the credit points referred to in subsection (a) and in section 38, the income of the spouse who is not the registered spouse shall not be included in the computation of the taxable income of the registered spouse, and the credit points referred to shall not be taken into account in computing the tax of the registered spouse.
(c)The credit referred to shall be granted for a tax year that falls wholly or partly within the said period of 54 months, according to the number of months the new immigrant resided in Israel in that year, and shall be granted only the first time a person becomes a new immigrant; upon his request, a period of continuous absence from the country of not less than six months and not exceeding three years shall not be counted in the 54-month period.
(d)In this section —

"new immigrant" — a person who holds an immigrant visa or immigrant certificate under the Law of Return, 5710-1950, or who is entitled to such a visa or certificate and holds a visa or temporary residence permit under the Entry into Israel Law, 5712-1952, a returning resident, or a person who belongs to a category of persons whom the Minister of Finance has determined shall be treated as a new immigrant for this purpose, but excluding a person whose Israeli citizenship was revoked pursuant to section 10(d) of the Citizenship Law, 5712-1952;

"returning resident" — an individual who again became a resident of Israel during the period from the 3rd day of Sivan 5770 (16 May 2010) until the 14th day of Tishrei 5773 (30 September 2012), after having been a foreign resident for six consecutive years; for this purpose, a person who holds a returning resident certificate from the Ministry of Immigrant Absorption stating that he was outside Israel for at least six years shall be deemed to have been a foreign resident for six consecutive years.

(e)Notwithstanding the provisions of subsection (c), the Minister of Finance may, with the approval of the Finance Committee of the Knesset, prescribe —
(1)rules for the granting of credits under subsection (a) to a person who was previously within the definition of "new immigrant";
(2)whether as a general rule or in particular cases, other provisions regarding the commencement of the 54-month period and the interruption of the continuity of the period.
35a.§

(Repealed — תשל״ה־2)

Credit for Travel to Place of Earning§

36.

In computing the tax of an individual resident of Israel, ¼ of a credit point shall be taken into account as a travel credit.

Credit for a Woman§

36a.

In computing the tax of a woman, ½ of a credit point shall be taken into account.

Credit for a Spouse§

37.

In computing the tax of a beneficiary individual who is a resident of Israel and who has proved, to the satisfaction of the assessing officer, that in the tax year his or her spouse's maintenance was upon him or her, one credit point shall be taken into account; for the purposes of this section, "beneficiary individual" — an individual who, or whose spouse, has reached retirement age, or who, or whose spouse, is blind or disabled within the meaning of section 9(5)(a) or (a1).

Credit for a Working Spouse§

38.
(a)In computing the income of an individual resident of Israel who is a registered spouse and whose taxable income includes the income of his or her spouse, and it has been proved to the satisfaction of the assessing officer that the income of his or her spouse was derived from his or her personal exertion in a business or profession or from employment, including income from personal exertion as referred to in paragraphs (1) to (6) of the definition thereof in section 1, ¼ of a credit point under section 36, 1½ credit points if they are not entitled to an allowance point under section 40(a), and 1¾ credit points if they are entitled to allowance points as aforesaid, shall be taken into account, and for the purpose of a beneficiary individual as defined in section 37, the credit point referred to in that section shall also be taken into account.
(b)Notwithstanding the provisions of subsection (a), if the income of the spouse who is not the registered spouse does not exceed an amount equal to five times the amount of the fractions of the credit points referred to, as applicable, the income of the registered spouse shall not be included, and the fractions of the credit points referred to shall not be taken into account in computing the tax of the registered spouse.

Credit for an Assisting Spouse§

39.

In computing the tax of an individual resident of Israel whose spouse assisted him or her, for at least 24 hours every week within 9 months of the tax year, in earning his or her income from a business or profession, 1½ credit points shall be taken into account if he or she is not entitled to an allowance point under section 40(a), and ¾ of a credit point if he or she is entitled to an allowance point as aforesaid, and for the purpose of a beneficiary individual as defined in section 37 the credit point referred to in that section shall also be taken into account, provided that if he or she is entitled, on account of his or her spouse, also to credits under section 38, the credits under one of the two sections shall be granted, at his or her election.

Credit for a Discharged Soldier§

39a.

In computing the tax on the income from personal exertion of a discharged soldier, a fraction of a credit point shall be taken into account for each month of the first thirty-six months following the month in which he or she completed his or her regular service, as set out below:

(1)1/6 of a credit point — if he or she served in regular service of —
(a)in the case of a male — at least 23 full months;
(b)in the case of a female — at least 22 full months;
(2)1/12 of a credit point — if he or she served in regular service of less than —
(a)in the case of a male — 23 full months;
(b)in the case of a female — 22 full months;

for this purpose, "discharged soldier" and "regular service" — as defined in the Absorption of Discharged Soldiers Law, 5754-1994.

Credit for Reserve Service as a Combatant§

39b.
(a)In computing the tax for the tax year of an individual who served in reserve service as a combatant in the tax year preceding it (hereinafter — the previous tax year), credit points shall be taken into account as set out below:
(1)½ of a credit point — if he or she served in reserve service as a combatant for between 30 and 39 days in the previous tax year;
(2)¾ of a credit point — if he or she served in reserve service as a combatant for between 40 and 49 days in the previous tax year;
(3)one credit point — if he or she served in reserve service as a combatant for 50 days or more in the previous tax year;
(4)an additional ¼ of a credit point for every five additional days served in reserve service as a combatant beyond the 50 days referred to in paragraph (3), provided that the total credit points under this section shall not exceed 4 credit points.
(b)In this section —

"combatant" — as defined in army orders, as defined in the Military Justice Law, 5715-1955;

"reserve service" — as defined in the Reserve Service Law, 5768-2008.

Allowance Points and Credit for Children§

40.
(a)An individual resident of Israel is entitled to allowance points in respect of each of his or her children as prescribed in section 109 of the National Insurance Law [Consolidated Version], 5728-1968; payment of the allowance points shall be made by the National Insurance Institute under the National Insurance Law.
(b)
(1)In computing the tax of an individual resident of Israel who is a parent in a single-parent family who had children who had not yet reached the age of nineteen in the tax year and whose maintenance was upon him or her, but who is not entitled to a credit point under section 37, there shall be taken into account, in addition to the allowance points under subsection (a), in respect of his or her said children who are with him or her, 2½ credit points in respect of each child in the year of birth and ½ of a credit point in respect of each child in the year of majority, 4½ credit points in respect of each child from the tax year following the year of birth until the tax year in which he or she reached the age of two, 3½ credit points in respect of each child in the tax year in which he or she reached the age of three, 2½ credit points in respect of each child in the tax years in which he or she reached the ages of four and five, and two credit points in respect of each child from the tax year in which he or she reached the age of six until the tax year preceding the year of majority;
(1a)In computing the tax of an individual resident of Israel who is a father of a child in a single-parent family and is not entitled to credit points under paragraph (1), there shall be taken into account, against the tax applicable to his income from personal exertion, in respect of each such child, credit points as set out below, however, if the mother of the child in the single-parent family is a resident of Israel and is not entitled, in respect of that child, to credit points under paragraph (1), the credit points under this sub-paragraph shall be taken into account against her income from personal exertion, and not against the father's income:
(a)2½ credit points in the year of birth of the child;
(b)4½ credit points in respect of each child from the tax year following the year of birth until the tax year in which he or she reached the age of two, 3½ credit points in respect of each child in the tax year in which he or she reached the age of three, and 2½ credit points in respect of each child in the tax years in which he or she reached the ages of four and five;
(c)one credit point in respect of each child from the tax year in which he or she reached the age of six until the tax year preceding the year of majority;
(1a1)Notwithstanding the provisions of paragraphs (1) and (1a), where the year of birth of a child falls in one of the years 2017 or 2018, his or her mother shall be entitled to choose whether one credit point out of the credit points to which she is entitled as aforesaid in those paragraphs, as applicable, in the year of birth, shall be taken into account in the tax year in which the child was born or in the tax year following it;
(1b)In a single-parent family in which there is a child of one parent and that parent is entitled to credit points under paragraph (1), one additional credit point shall be taken into account against that parent's income from personal exertion; and likewise, notwithstanding the provisions of paragraph (1a), the credit points under that paragraph shall also be taken into account against the income of that parent;
(2)Parents who live separately — the parent entitled to a credit point under paragraph (1) shall receive one additional credit point, and if the maintenance of their children is divided between them, the parent who is not entitled to a credit point under paragraph (1) shall receive one credit point or a fraction thereof according to his or her share of the maintenance expenditure;
(3)For the purposes of this subsection —

"child of one parent" — a child who had not yet reached the age of nineteen in the tax year and one of whose parents died in the tax year or prior thereto, or who is registered in the Population Registry without the particulars of one of the parents;

"toddler" — (deleted)

"year of birth" — the tax year in which the child was born;

"year of majority" — the tax year in which the child reached the age of eighteen.

(c)(Lapsed)

Credit Point for a Divorcee Who Has Remarried§

40a.

In computing the tax of a divorcee who, or whose spouse, pays maintenance to his or her former spouse, and who is married to another spouse, one credit point shall be taken into account.

Credit Point for a Young Person§

40b.

In computing the tax of an individual who, or whose spouse, has reached the age of 16 but has not yet reached the age of 18, one credit point shall be taken into account.

Credit Points for an Individual Who Has Completed Studies for an Academic Degree§

40c.
(a)In computing the tax of an individual resident of Israel (in this section — individual), one credit point shall be taken into account if he or she is entitled to receive a first academic degree, and half a credit point if he or she is entitled to receive a second academic degree, from an institution of higher education.
(b)One credit point or half a credit point as referred to in this section, as applicable, shall be taken into account for a number of tax years equal to the number of years of his or her academic studies, provided that it shall be taken into account for no more than three tax years in respect of studies for a first academic degree and for no more than two tax years in respect of studies for a second academic degree.
(c)One credit point as referred to in this section in respect of studies for a first academic degree shall be taken into account commencing from the tax year following the tax year in which his or her studies for the first academic degree ended, and half a credit point as referred to in this section in respect of studies for a second academic degree — commencing from the tax year following the tax year in which his or her studies for the second academic degree ended.
(c1)Notwithstanding the provisions of subsection (c), an individual who is entitled to receive a first or second academic degree in a field of occupation requiring an internship whose completion is a condition for the internship, is entitled to choose whether the credit points referred to in subsection (a) shall be taken into account commencing from the tax year following the tax year in which his or her studies for that academic degree ended, or commencing from the tax year following the tax year in which he or she completed his or her internship, provided that the internship period commences no later than the tax year following the tax year in which his or her studies for that academic degree ended.
(d)Notwithstanding the provisions of subsections (a) to (c) —
(1)if the individual is entitled to receive a third academic degree in medicine or dentistry, one credit point, for three tax years, and half a credit point, for two tax years, shall be taken into account commencing from the tax year following the tax year in which his or her studies for the third academic degree ended;
(2)if the individual studied on a direct track to a third academic degree, one credit point shall be taken into account in respect of studies for a first degree, commencing from the tax year following the tax year in which his or her studies for the first degree ended, and for the number of tax years referred to in subsection (b) with respect to studies for a first academic degree; in addition, half a credit point shall be taken into account, for two tax years, commencing from the tax year following the tax year in which his or her studies for the third academic degree ended.
(e)One credit point or half a credit point as referred to in this section, as applicable, shall be taken into account in respect of studies for one first academic degree or one second academic degree only, and after the individual has presented to the assessing officer a certificate of completion of studies and entitlement to the degree as aforesaid.
(f)In this section —

"Council Law" — the Council for Higher Education Law, 5718-1958;

"institution of higher education" — as its meaning in the Council Law;

"academic degree" — a recognised degree as its meaning under the Council Law.

Credit Point for an Individual Who Has Completed Vocational Studies§

40d.
(a)In computing the tax of an individual resident of Israel, one credit point shall be taken into account if he or she completed vocational studies and was entitled to a vocational certificate, provided that he or she presented to the assessing officer a certificate of completion of studies and entitlement to a vocational certificate as aforesaid.
(b)A credit point as referred to in this section shall be taken into account for a number of tax years equal to the number of years of the vocational studies, provided that it shall be taken into account for no more than three tax years.
(c)A credit point as referred to in this section shall be taken into account commencing from the tax year following the tax year in which his or her studies ended.
(d)In this section —

"vocational studies" — studies for the acquisition of a specific vocation, for a volume of study hours identical to at least 1,700 study hours customary at an institution of higher education, as defined in section 40c;

"vocational certificate" — a certificate granted upon completion of vocational studies, recognised by a government ministry.

Prevention of Duplication§

40e.

An individual who meets the conditions prescribed in section 40c and in section 40d shall be entitled to choose whether one credit point or half a credit point, as applicable, under section 40c, or a credit point under section 40d, shall be taken into account in computing his or her tax.

40f.§

(Repealed — תשס״ה־9)

Spouse Who Was Married for Part of the Year§

41.

A spouse who is not a registered spouse and who was married for part of the tax year shall be entitled, for the purposes of computing the tax for which he or she is liable —

(1)for a period during which he or she was not married — to 1/12 of the credit points under sections 34, 36, 40(b) and 40b, multiplied by the number of months in the tax year during which he or she was not married;
(2)for the period during which he or she was married — to 1/12 of the credit points under section 66, multiplied by the number of months in the tax year during which he or she was married.

Report to the Knesset§

41a.

During the period commencing on the date of commencement of the Economic Efficiency Law (Legislative Amendments for Achieving Budget Targets for the 2019 Budget Year), 5778-2018, the Director General of the Ministry of Finance and the Director shall examine, in consultation with various academic parties, the granting of credit points to the family unit, in accordance with experience accumulated in Israel and worldwide, and shall report their findings to the Finance Committee of the Knesset no later than the 27th day of Sivan 5779 (30 June 2019).

42.§

(Repealed — תשנ״ב־6)

43.§

(Repealed — תשמ״ד־10)

Credit for Expenses of Maintaining a Relative in an Institution§

44.

In computing the taxable income of an individual who is a resident of Israel, where the individual or their spouse paid in the tax year for the maintenance in a special institution of a child, spouse or parent who is completely paralysed, permanently bedridden, blind or of unsound mind, and also in respect of the maintenance of a child with an intellectual-developmental disability in a special institution, there shall be allowed a tax credit of 35% of that part of the amounts paid that exceeds 12.5% of their taxable income. The Minister of Finance may prescribe by Regulations conditions for entitlement to a tax credit under this Section.

Credit for Dependants§

45.
(a)An individual who is a resident of Israel who had in the tax year a paralysed child, a blind child or a child with an intellectual-developmental disability, or whose spouse had such a child, shall have two credit points taken into account in computing their tax or the tax of their spouse in respect of each such child.
(b)(Repealed)
(c)An individual shall be entitled to credit points under subsection (a) only if they did not receive a tax credit for the same child under section 44.
(d)The Minister of Finance may prescribe conditions for entitlement to credit points under this Section.

Credit for Insurance Premiums and Provident Payments§

45a.
(a)An individual shall be credited against tax with 25% of the amounts paid by the individual or their spouse in the tax year —
(1)for life insurance of the individual or their spouse with an insurance company if the individual is a resident of Israel;
(2)(Repealed)
(b)An individual shall be credited against tax with 35% of the amounts paid by the individual or their spouse in the tax year to a pension provident fund, or paid as aforesaid to the State, a local authority or another body designated by the Minister of Finance, for the purpose of preserving the pension rights of the individual or their spouse, or that are to be paid as aforesaid for insurance of survivors' pension.
(b1)A preferred member shall be credited against tax as provided in subsections (a) and (b) also in respect of amounts paid for life insurance of their child with an insurance company, to a provident fund for the benefit of their child, or for the purpose of preserving their child's pension rights, subject to the conditions referred to in those subsections, as the case may be, provided that the age of that child in the tax year was 18 years or above.
(c)In this Section —

"life insurance" — insurance against the risk of death of the insured, without a savings component, that does not include survivors' pension payments;

"survivors' pension insurance" — insurance against the risk of death of the insured, without a savings component, that includes survivors' pension payments;

"insured income", "qualifying income" and "preferred member" — as defined in section 47;

"comprehensive pension" — (Repealed)

(d)Notwithstanding the provisions of subsections (a) and (b), the total amount in respect of which a credit shall be granted to an individual who is not a preferred member for amounts paid as aforesaid in those subsections shall not exceed the higher of the amounts set out below:
(1)a sum of NIS 1,632;
(2)the lower of the following:
(a)the total amounts paid as aforesaid in subsections (a) and (b);
(b)
(1)in respect of an individual who had no employment income in the tax year — 5% of their qualifying income, provided that the total amount in respect of which a credit shall be granted for amounts paid for survivors' pension insurance as referred to in subsection (b) shall not exceed 1.5% of the individual's qualifying income;
(2)in respect of an individual who had employment income in the tax year — 7% of their qualifying income, provided that the total amount in respect of which a credit shall be granted for amounts paid for survivors' pension insurance as referred to in subsection (b) shall not exceed 1.5% of the individual's qualifying income, and that the total amount in respect of which a credit shall be granted for the aggregate amounts paid for life insurance as referred to in subsection (a)(1), for survivors' pension insurance as referred to in subsection (b) and in respect of income that is not employment income, shall not exceed 5% of the individual's qualifying income.
(e)Notwithstanding the provisions of subsections (a) to (b1), the total amount in respect of which a credit shall be granted to a preferred member for amounts paid as aforesaid in those subsections shall not exceed the higher of the amounts set out below:
(1)the amount referred to in subsection (d)(1);
(2)the lower of the following:
(a)the total amounts paid as aforesaid in subsections (a) to (b1);
(b)
(1)in respect of a preferred member who had no insured income in the tax year — 5% of their taxable income up to an amount equal to twice the amount referred to in paragraph (1) of the definition of "qualifying income" in section 47(a)(1) per year, provided that the total amount in respect of which a credit shall be granted for amounts paid for survivors' pension insurance as referred to in subsection (b) shall not exceed 1.5% of the preferred member's qualifying income;
(2)in respect of a preferred member who had insured income in the tax year — the amount resulting from the aggregation of the amounts set out below:
(a)7% of their qualifying income that is insured income, provided that the total amount in respect of which a credit shall be granted for amounts paid for survivors' pension insurance as referred to in subsection (b) shall not exceed 1.5% of such income, and that the total amount in respect of which a credit shall be granted for the aggregate amounts paid for life insurance under subsections (a)(1) and (b1), and for survivors' pension insurance under subsection (b), shall not exceed 5% of such income;
(b)5% of their taxable income that is not insured income, up to an amount equal to twice the amount referred to in paragraph (1) of the definition of "qualifying income" in section 47(a)(1) per year, less an amount as referred to in paragraph (1) of that definition or the amount of their insured income, whichever is the lower, provided that the total amount in respect of which a credit shall be granted for amounts paid for survivors' pension insurance as referred to in subsection (b) shall not exceed 1.5% of their taxable income that is not insured income.
(f)An individual for whom amounts were not deducted in respect of the purchase of preferred insurance against loss of working capacity under section 32(14)(b) shall be credited against tax at the rate of 35% of the amounts deposited by them to a pension provident fund for themselves as an independent member for which they have not been credited under subsection (b), up to the rate of 0.5% of their income from a business or profession up to an amount equal to twice the amount referred to in paragraph (1) of the definition of "qualifying income" in section 47(a)(1), less their insured income.
45b.§

(Repealed — תש״ן־4)

Donation to a Public Institution§

46.
(a)A person who donated in a given tax year an amount exceeding NIS 180 to a national fund, or to a public institution as its meaning in section 9(2) that the Minister of Finance has designated for this purpose with the approval of the Finance Committee of the Knesset, shall be credited against the tax that the person is liable for in that year at the rate of 35% of the amount of the donation — if the person is an individual, and at the rate prescribed in section 126(a) of the amount of the donation — if the person is a body of persons, provided that no credit shall be granted in a given tax year in respect of a total amount of donations exceeding 30% of the taxpayer's taxable income in that year, or NIS 9,000,000, whichever is the lower (hereinafter — the credit ceiling); an amount exceeding the credit ceiling donated in that tax year shall be credited against the tax in accordance with the provisions of this Section in the three consecutive following tax years, provided that no credit shall be granted in each of the three said tax years in respect of a total amount of donations exceeding the credit ceiling.
(a1)The Minister of Finance may cancel the designation of a public institution as referred to in subsection (a) that has failed to submit two consecutive annual reports, or where it emerges from the reports submitted that it does not maintain books of account as required by law or that a substantial part of its activity is not directed towards achieving the public purpose.
(a2)Renewal of a designation that was cancelled under subsection (a1) requires the approval of the Finance Committee of the Knesset.
(b)(Repealed)
(c)In this Section, "national fund" — the Jewish Agency for Israel, the World Zionist Organisation, the United Israel Appeal and the Jewish National Fund.
(d)
(1)Where the books of account of a public institution have been declared inadmissible by a determination that is no longer subject to appeal, the Administrator may cancel the designation under subsection (a) from that day onwards;
(2)The institution shall notify the public of such cancellation in the manner and at the time prescribed by the Administrator.

Overall Ceiling for Tax Benefits for Donations and R&D§

46a.

Notwithstanding any law, the total amount in respect of which a credit for donations under section 46 and a deduction for participation in the financing of research and development carried out by another person under section 20a and under the Income Tax Law (Benefits for Investment in Securities the Proceeds of which are Intended for Scientific Research), 5744-1983, shall be allowed in a given tax year, shall not exceed 50% of the taxpayer's taxable income in that year; for this purpose, "taxable income" — before the deduction for participation in research and development.

Credit for Donation — Addition to the Advance Payments Base§

46b.

The amount of tax from which a person has been exempted from payment by reason of the credit for donations under section 46 and under any other law shall be added to the amount of tax constituting the basis for the determination of advance payments under section 175.

46c.§

(Repealed — תשמ״ד־10)

Deduction of Payments for Provident Benefits or a Pension§

47.
(a)In this Section —
(1)"qualifying income" — the total taxable income of an individual, before the deduction under this Section and under section 47a, as detailed below, as the case may be:
(1)in respect of an individual who had only employment income — up to NIS 84,000 per year;
(2)in respect of an individual who had no employment income — up to NIS 118,800 per year;
(3)in respect of an individual who had both employment income and income that is not employment income — in respect of employment income, up to the amount referred to in paragraph (1), and in respect of income that is not employment income, up to the amount referred to in paragraph (2) less their employment income or less the amount referred to in paragraph (1), whichever is the lower, provided that their employment income is taken into account first.
(2)(Repealed)
(3)"income for an independent member" — the total taxable income of an individual before the deduction under this Section and under section 47a, up to the amount referred to in paragraph (1) of the definition of "qualifying income" per year, less their insured income;
(4)"insured income" — employment income in respect of which an employer paid, in the tax year, amounts to a pension provident fund on behalf of the employee, as well as employment income in respect of which the employee is entitled to a pension under law or contract;
(5)"additional income" — the lower of the following:
(1)the total taxable income of an individual before the deduction under this Section and under section 47a, that is not insured income, up to the amount referred to in paragraph (1) of the definition of "qualifying income" per year;
(2)the total taxable income of an individual before the deduction under this Section and under section 47a, up to an amount equal to two and a half times the amount referred to in paragraph (1) of the definition of "qualifying income" per year, less their insured income or the amount referred to in paragraph (1) of that definition, whichever is the higher;
(6)(Repealed)
(7)"preferred member" — an individual in respect of whose income amounts were paid on their behalf in the tax year to a pension provident fund in an amount that was not less than 16% of the total average wage in the economy in that tax year;
(8)"average wage in the economy" — as defined in section 3(e3)(2).
(b)An individual who is not a preferred member, where the individual or their spouse paid in the tax year amounts to a pension provident fund only, for the benefit of either of them, even if the individual has bequeathed that after their death their right shall be transferred for the benefit of an institution recognised as a public institution for the purposes of section 9(2), or paid as aforesaid to the State, a local authority or another body designated by the Minister of Finance, for the purpose of preserving the pension rights of either of them, shall be allowed a deduction of the amounts paid as aforesaid, provided that the deduction shall not exceed —
(1)7% of their qualifying income that is not employment income; however, if they paid an amount exceeding 12% of such income, there shall be allowed to them, in respect of the part exceeding 12% as aforesaid, an additional deduction of up to 4% of that income;
(2)the lower of the following:
(a)5% of their qualifying income that is employment income that is not insured income;
(b)5% of their taxable income that is employment income up to an amount equal to two and a half times the amount referred to in paragraph (1) of the definition of "qualifying income" per year, less their insured income.
(b1)A preferred member where the individual or their spouse paid in the tax year amounts to a pension provident fund for the benefit of the preferred member, and a preferred member who paid in the tax year amounts as aforesaid for the benefit of their child whose age in the tax year was 18 years or above, shall be allowed a deduction of the amounts paid as aforesaid, provided that the deduction shall not exceed the following, as the case may be:
(1)in respect of amounts paid as aforesaid — 11% of the income for an independent member;
(2)in respect of amounts paid as aforesaid for which no deduction was allowed under paragraph (1) — 7% of the additional income; however, if the amounts paid as aforesaid exceed 12% of their additional income, there shall be allowed to them in respect of the part exceeding 12% as aforesaid an additional deduction not exceeding 4% of the additional income, and all provided that no deduction shall be granted under this paragraph in respect of amounts deposited on behalf of the preferred member the sum of which does not exceed 16% of the average wage in the economy.
(b2)An amount deducted under subsection (b) shall not be deductible under subsection (b1), and vice versa.
(c)An amount deducted under subsection (b) or (b1) shall not be taken into account for the purposes of section 45a.
(d)The Minister of Finance, with the approval of the Finance Committee of the Knesset, may prescribe deductions at rates higher than those referred to in subsection (b) for a particular class of persons and subject to such conditions and qualifications as the Minister of Finance shall prescribe.

Deduction for National Insurance Payments and Parallel Tax§

47a.
(a)An individual who in a tax year paid insurance contributions under the National Insurance Law [Consolidated Version], 5728-1968 (hereinafter — the Insurance Law), and parallel tax under the Parallel Tax Law, 5733-1973 (hereinafter — parallel tax), in respect of income that is not employment income, shall be allowed a deduction of 52% of the amount paid, excluding an addition under section 179(a) of the Insurance Law, provided that the deduction shall not exceed their taxable income before the deduction.
(b)The provisions of subsection (a) shall also apply to an individual whose employer is not liable to pay parallel tax on their behalf or to pay national insurance contributions on their behalf and the individual is liable to pay them in respect of their employment income.
(b1)Notwithstanding the provisions of subsections (a) and (b), where an individual received in a particular tax year a refund from the National Insurance Institute in respect of an overpayment of insurance contributions paid in a prior tax year, as referred to in section 362 of the Insurance Law (in this subsection — the refund), there shall be allowed to them a deduction of 52% of the amount of insurance contributions paid in that particular tax year after the amount of the refund received in that year has been deducted therefrom; where the amount of the refund received by an individual in a particular tax year exceeds the amount of insurance contributions paid in that tax year, 52% of the difference shall be treated, for the purposes of this Ordinance, as earnings or profit from a business or profession of the person who received them, at the time of their receipt; for this purpose, "the amount of the refund" — excluding an addition paid under section 362 of the Insurance Law.
(c)An individual whose employer is not liable to pay parallel tax on their behalf and who is also not liable to pay parallel tax, as well as any other individual exempt from payment of parallel tax, shall be allowed a deduction of 52% of the amounts paid for medical insurance that is not dental medical insurance, to a body designated by the Minister of Finance after consultation with the Minister of Health, up to the amount of the parallel tax that would have applied to them had they been liable to pay it.
(d)The provisions of this Section with respect to the Parallel Tax Law shall apply only for the period ending on the 21st of Tevet 5757 (31 December 1996).
47b.§

(Repealed — תש״ן־4)

Fees and Expense Reimbursements Paid to a Pension Adviser Treated as Payments to a Provident Fund§

47c.
(a)The Minister of Finance may prescribe conditions upon the fulfilment of which fees and expense reimbursements paid to a pension adviser shall be treated, for the purposes of sections 3(e3), 17(5a), 45a and 47, as payments made to a provident fund; where the Minister of Finance has so prescribed, the conditions, ceilings and limitations prescribed in those sections shall apply, with the necessary modifications, to fees and expense reimbursements paid as aforesaid.
(b)In this Section, "pension adviser" — as defined in the Supervision of Financial Services Law (Pension Advice, Marketing and Clearing System), 5765-2005.

Credits for Residents of the Area§

48.

The Minister of Finance, with the approval of the Finance Committee of the Knesset, may prescribe by Order that the provisions of sections 34, 36 and 37, all or part thereof, shall apply, with the necessary modifications, also to residents of the Area who are not Israeli citizens, all or some of them, as if they were residents of Israel; for this purpose, "Area", "resident of the Area" and "Israeli citizen" — as defined in section 3a.

Credits for a Foreign Worker§

48a.

The Minister of Finance may prescribe that the provisions of this Chapter with respect to credits, all or part thereof, shall not apply to a foreign worker or to classes of foreign workers as the Minister of Finance shall prescribe, or that they shall apply to them partially subject to conditions as the Minister of Finance shall prescribe; for this purpose, "foreign worker" — as defined in the Foreign Workers Law (Prohibition of Unlawful Employment and Assurance of Fair Conditions), 5751-1991, even if such worker is regarded as a resident for the purposes of this Ordinance.

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