The tax rate in Israel for 2023 is expected to remain unchanged compared to previous years. The income tax rate for individuals is progressive, with rates ranging from 10% for those with the lowest income to 47% for those with the highest incomes. This means that people who earn lower incomes will pay a lower percentage of their income in taxes, while those who earn higher incomes will pay a higher percentage.
Over an income of about NIS 698,000 there is a wealth tax of 3% of the income.
The following are the tax rates applicable to personal income for the 2023 tax year:
Monthly income Tax rate Annual income Tax rate
Up to ns6,790 10% to 81,480 ns 10%
From ns6,791 to ns9,730 ns 14% From ns81,481 to ns116,760 14%
From 9,731 ns to 15,620 20% From ns116,761 to 187,440 ns 20 %
From ns15,621 to ns21,710 31% From ns187,441 to ns260,520 31%
From ns21,711 to ns45,180 35% From ns260,521 to 542,160 ns 35%
Of each additional shekel 47% of each additional shekel 47%
In addition to income tax, there are also national insurance contributions (national insurance), which are currently defined as 16% for salaried employees and 23% for the self-employed. This contribution is used to fund social welfare programs, such as health and pension services.
Corporate tax rates in Israel are set at 23%, which is low relative to other developed countries. This rate applies to both domestic and foreign companies operating in Israel, making it an attractive location for international businesses looking to minimize their tax burden. In addition, there is a value-added tax (VAT) of 17% on most goods and services, which is added to the cost of goods and services at the point of sale.
It is also worth noting that Israel has a number of free trade agreements with other countries, which can make it an attractive location for international businesses looking to minimize their tax burden. For example, the U.S.-Israel Free Trade Agreement includes provisions to reduce or cancel tariffs on goods traded between the two countries.
Overall, the Israeli tax rate remains competitive for both individuals and businesses, with a relatively low corporate tax rate and a number of free trade agreements that can provide additional benefits. However, there is some talk of potential changes that could be made to address income inequality and raise additional revenues for the government. The government is taking steps to ensure that the tax system is fair and equitable, while providing funding for important welfare programs.
