Under the Income Tax Ordinance as it stands today, Israel will not index its tax brackets or the value of a credit point on January 1, 2027, because a 2024 law froze indexation for 2025 through 2027. Unless new legislation changes that, the 2027 brackets will match 2026: 10% up to ILS 7,010 a month, 20% up to ILS 19,000 and 31% up to ILS 25,100, and a credit point will stay at ILS 242 a month (ILS 2,904 a year). The Tax Authority has not yet published its official 2027 tables.
Last updated: November 6, 2026. The Israel Tax Authority has not yet published its 2027 withholding tables. This page reflects the law in force today, and we will update it when the official figures come out or if the law changes.
Under the Income Tax Ordinance as it reads today, Israel's income tax brackets and the value of a credit point will not be adjusted for inflation on January 1, 2027. Unless new legislation passes, the 2027 brackets will be the same as in 2026, and a credit point will stay at ILS 242 a month (ILS 2,904 a year).
In a normal year, section 120B of the Ordinance indexes the bracket thresholds, the credit point and a number of other amounts every January 1, based on the rise in the consumer price index over the previous year. A law published on December 26, 2024, the Economic Efficiency Law for the 2025 budget year (freeze of tax indexation and surtax), added subsection (e) to section 120B:
The Tax Authority says the same thing in its 2026 payroll withholding tables (Hebrew): amounts that would normally be indexed under section 120B were not updated for 2025 through 2027.
Two brackets were widened in 2026. According to a February 2026 report by the Knesset Research and Information Center, the 20% bracket now runs up to ILS 19,000 a month instead of 16,150, and the 31% bracket up to ILS 25,100 instead of 22,440, retroactive to January 1, 2026. The change was written into section 121 of the Ordinance itself with no end date, so under current law it applies in 2027 as well.
These are the 2026 brackets for earned income (mainly salary and business income), per the Tax Authority tables:
The three lowest rates (10%, 14% and 20%) apply to earned income and to the income of anyone aged 60 or older. Other income, such as interest or rent taxed on the regular track, starts at 31%.
A credit point comes off the tax itself, not off your income. Under section 33A of the Ordinance, one point is worth ILS 2,904 a year for 2024 through 2027, which works out to ILS 242 a month.
New immigrants get extra credit points during their first years in Israel. Our guide to Form 1301 for olim explains how they are claimed.
According to the Tax Authority tables, the maximum exemption on pension annuities under section 9A of the Ordinance is rising in steps: 57.5% in 2026, 62.5% in 2027 and 67% from 2028. If you are drawing a pension or retiring in 2027, you will feel the difference.
When brackets stay put and pay goes up, more of your income lands in higher brackets. A few things are worth checking before 2027 starts:
For an overview of what you pay as a freelancer or business owner, see what taxes a self-employed person pays in Israel. Want to see how the 2027 brackets affect your salary, your draws from your company or your tax planning? Book a consultation call with our English-speaking team or call +972-52-448-5784. Meetings are by appointment in the Tel Aviv area.
Not for inflation. Section 120B(e) of the Income Tax Ordinance freezes indexation on January 1 of 2025, 2026 and 2027, so unless new legislation passes, the 2027 brackets will be the same as 2026. Indexation resumes on January 1, 2028.
The Ordinance sets one credit point at ILS 2,904 a year, or ILS 242 a month, for 2024 through 2027. Every Israeli resident gets 2.25 basic points, and women get an extra half point.
On earned income: 10% up to ILS 7,010 a month, 14% up to 10,060, 20% up to 19,000, 31% up to 25,100, 35% up to 46,690 and 47% above that. A 3% surtax applies to annual income above ILS 721,560.
Yes, under current law. It was enacted in 2026 as an amendment to section 121 of the Ordinance, effective January 1, 2026, with no end date.
The Tax Authority publishes its payroll withholding tables for January onward each year. The 2027 tables have not been published yet, and we will update this page when they are.