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2.1ÌýÌýÌýÌý Withholding of income tax

Taxable employment income includes:

1. Ìý

   •ÌýÌýÌýÌý salary

2. Ìý

   •ÌýÌýÌýÌý bonus

3. Ìý

   •ÌýÌýÌýÌý other forms of compensation (eg stock-based compensation plans)

4. Ìý

   •ÌýÌýÌýÌý cost of living allowance

5. Ìý

   •ÌýÌýÌýÌý tax equalisation payments

6. Ìý

   •ÌýÌýÌýÌý benefits-in-kind

Israeli tax brackets start at 10% of an employee's income and increase incrementally up to 47%. An additional 3% surtax applies on annual taxable income exceeding NIS 721,560 (in 2024), resulting in a 50% maximum income tax rate. The Income Tax circular of the Israel Tax Authority for the year 2024 can be found at Gov.il

The annual tax brackets are an aggregation of monthly brackets. These are periodically updated for inflation. A minimum tax rate of 31% generally applies to certain classes of passive income not derived from business or employment earned by a taxpayer under age 60.

Though non-residents are taxed at the same rates as Israeli residents (see 6.5 for more on non-resident taxation), they are subject to some special non-resident exemptions.