Yes, if you earn salary or pension from more than one payer in Israel. Without tax coordination (teum mas), the Tax Authority says a secondary employer or payer must withhold the maximum rate of 47%. You can coordinate online through the Tax Authority’s personal area for the current year. A side business is taxed separately, through advances and an annual return, or through tax coordination if you qualify as a small business owner.
If you receive a salary or pension from more than one payer in the same year, you should do tax coordination (in Hebrew, teum mas). Each employer calculates tax as if its salary were your only income, so the tax brackets and your credit points are applied more than once. The rules prevent this by making the secondary employer withhold at the top rate. According to the Tax Authority's 2026 guide, if you have income from several payers and do not coordinate, the payer that is not your main one must deduct the maximum tax of 47%. Tax coordination sets the correct rate for each payer, so you do not overpay during the year.
Israeli payroll tax is withheld monthly using progressive brackets. Tax credit points (nekudot zikui) reduce the tax, and they are meant to be claimed from one employer only. When you have two jobs, neither employer knows about the other. If each one applied the low brackets and your credit points, you would underpay. The system therefore assumes the worst for the secondary payer until you coordinate. Tax coordination spreads the brackets and credit points across your employers according to your expected annual income.
Two points to remember:
The Tax Authority's guide lists two situations:
Olim are a common case. You may start a job shortly after arriving, change jobs in your first year, or be entitled to credit points your employer is not applying. See Israel's 10-year tax holiday for olim for the wider set of benefits.
The Tax Authority's online service is free. It is open to employees with more than one employer, employees asking for tax relief, and small business owners. You log in through the personal area on the Tax Authority website.
Coordination is done for the current tax year only. If you received a letter extending last year's coordination, you do not need a new one for the following year.
According to the Tax Authority, you must go through the assessing office (by appointment) if:
The manual route uses form 116, the request for relief and coordination of tax deductions.
A side business is different from a second job. No employer withholds tax from business income, so tax coordination on your salary does not cover it by itself. What applies depends on how the business is registered.
As a regular self-employed person, you pay income tax on business profits through advance payments (mikdamot) during the year and file an annual return. Your salary is still taxed through payroll. The two are reconciled in the annual return. If you also have more than one employer, you still coordinate the salaries. For how the self-employed side works, see What taxes do self-employed people pay in Israel?
Since the small-business reform, a dealer whose annual turnover does not exceed the osek patur ceiling can choose to be treated as a small business owner. The Tax Authority's FAQ gives the ceiling as about NIS 122,833 for 2026. A small business owner deducts expenses at a flat 30% of turnover instead of actual expenses. In most cases they are also exempt from filing an annual return, paying income tax advances and filing a capital declaration. The condition is that tax on the business is handled through tax coordination by 31 December and a shortened report of actual turnover by 31 March of the following year.
If you miss either step, the Tax Authority's FAQ says you are moved back to the regular track and must file a full annual return and meet all the usual obligations. The online coordination service also warns that the business will be reclassified for the current year and at least two further years. Joining the track is voluntary. There are anti-avoidance limits: for example, an employee who switches to providing the same services as a contractor to their former employer cannot register as a small business owner.
If you are not sure which track suits your side business, or you are an oleh in your first year of Israeli employment, an English-speaking accountant can review your income sources and do the coordination for you.
According to the Tax Authority, the employer or payer that is not your main one must deduct the maximum tax rate of 47%. Overpaid tax can be reclaimed later, up to six years back from the end of the tax year.
No. The online service coordinates the current tax year only. For a past year where too much tax was withheld, you file a request for a tax refund instead.
Only on the small business owner track, where coordination by 31 December replaces advances and, in most cases, the annual return. A regular osek patur or osek murshe pays through advances and files an annual return.
The withholding file number of each employer or payer, ideally a payslip from each, and documents supporting any tax relief you are claiming, such as proof of aliyah or a degree certificate.