Jobs in Israel - Taxes and Benefits for Employees in Israel

Israel has treaties with many countries including USA, UK, and several European countries concerning taxation for income earned in Israel.

If an expat employee works in Israel and is earning money in Israel, tax obligations are obliged to the authorities of Israel.

According to one’s individual status, there might be other taxes implied by country of residence. However, an employee will not be taxed the same amount on the same income.

Every resident in Israel is obligated to pay for social security and national insurance taxes. The employer is also required to contribute a fixed amount according to employee’s income.

An Israeli resident must pay according to the table below (based on one’s income). An expat employee (non-Israeli) must also pay a minimum fee applicable by law. However, a non-Israeli employee must also show proof of private health insurance.

The following chart provides income tax ranges and insurance rates for employees working in Israel based on the employee’s salary.

Several of the social benefits including the Pension Fund and Severance Pay became mandatory in 2010.

According to the Severance Pay law, the employer is required to pay a percentage of the employee’s gross monthly salary. The percentage is 1.67% for the first year and up to 8.33% for the second year and thereafter. The employee is entitled to this fund regardless of termination or acquittal.

According to the Pension Fund, the employee and employer are both required to pay 2.5% of the gross monthly salary for the first year and up to 5% in the third year. This fund is accessible at retirement age, which is 64 years for women and 67years for men.

Jobs in Israel - Advance Study Fund

This fund is not mandated. However, an employer can provide an employee the option of placing up to 7.5% of the monthly salary into this fund.

The employee will place 2.5% of their monthly salary tax-free. Employees cannot use the savings for 6 years from the date of opening the fund.

Jobs in Israel - Recreation Pay

According to Israeli regulation, yearly recreation payment is paid to employees working longer than 12 months.

The payment is given in the month of July or August after completing the 12th month and is paid once a year.

The amount is by seniority and is regulated by the law of 2010: 1st year 1655 NIS yearly payment, 2nd year 1986 NIS yearly payment.

Jobs in Israel - Vacation

According to the law, throughout the first year of employment, a minimum of 10 days of vacation is allotted to the employee, not including mandated holidays. This amount of vacation days increases with seniority.

Jobs in Israel - Sick

According to Israeli law, an employee is given 1.5 days of sick time for every month worked, up to a maximum of 90 sick days accumulated.

First day: no payment is received
2nd and 3rd: 50% of normal salary
4th and on: 75% of normal salary

Working in Israel - Termination Notice

According to the Israeli law, each month of employment requires 1 day of notice by both employee and employer for termination or acquittal of position. The 7th month thru the 1st year requires 6 days of notice plus 2.5 days per each month. After one year, a 30-day notice for mutual termination is required.

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