The employer’s contribution towards Social Security (Bituach Leumi), on the higher bracket, has been raised from 6.75% (Dec 2014) to 7.25%, for employees age 18 to retirement age, starting in January 2015.
A raise of 0.5%.
The employee’s contribution remains without change.
The minimum wage in Israel (currently at 4,300 sh per month or 23.12 sh per hour) is being updated in three stages, according to an agreement signed by the General worker’s union (Histadrut klalit) and the Presidency of the Business Organizations in Israel. This will be voted into the book of labor laws by the knesset soon.
The changes are:
per month per hour
From 4/2015 – 4,650 sh 25 sh
From 8/2016 – 4,825 sh 25.94 sh
From 1/2017 – 5,000 sh 26.88 sh
From 4/2017 onwards – 52% of the average salary (but no less than 5,000 sh) to be updated quarterly (Jan, Apr, Jul, Oct) of each year.
Bracket Gross pay Accumulated tax
Ceiling for 10% 5,270 527
Ceiling for 14% 9,000 1,049
Ceiling for 21% 13,990 2,097
Ceiling for 31% 19,980 3,954
Ceiling for 34% 41,790 11,369
Ceiling for 48% 67,560 23,739
Every additional shekel 50%
The Israel Tax Authority has updated their website for citizens who want to apply for a tax reconciliation due to several simultaneous sources of income as a salaried employee. In the past, applying on line may have saved the time of physically going in to your local tax authorityoffice and waiting on line, but you still had to wait two weeks for the official documents to be sent to you via snail-mail. So, the first improvement of this process is an immediate procurment of the documents and the ability to immediately print them directly from the site !
In addition, every application recieves a serial number that can be accessed from any computer with internet capability to print extra copies at will.
The 3rd upgrade is that in the past, this was limited to a combined gross salary ceiling (from all sources) of 188,712 sh, this amount was updated to 436,272 sh !
And last, but not least, in the past you were allowed 3 tries, if you input mistaken information via the site, now that has been doubled to 6 tries, three and another three tries after 24 hours have past from the first three tries.
Save the time and do your tax reconciliation on your own time and in the comfort of your home ! No lines and no waiting !
Highly recommended
https://www.misim.gov.il/shteumeimas/frmPreMain.aspx
The new rates for convalescence pay (dmei havra’a) have been updated as of July 2014 as follows:
Private sector = 378 sh per day
Public sector – 427 sh per day
Payment is mandatory for all employees with min 1 year tenure with the present employee.
The number of days an employee is entitled to depends on the sector and the number of years of tenure they have incurred.
Many people move, sometimes temporarily, whatever the circumstances are, according to the law, an employee needs to update his/her employer within 7 days of the change (i.e. fill out the changes on your 101 tax form).
Notifying utilities and Municipality, etc can also be challenging, but many allow phone or email notifications. These are almost always done, as it’s in the person’s best interest, so they will recieve their mail, services (or stoppage of service). But people usually don’t have the time to go in to their local Ministry of Interior office and waste several hours in order to update their Israeli I.D. card (Teudat Zehut). People are working or studying and just do not want to be bothered. There should be some form of secure on-line form that can be updated with the relevant information, but that would be too efficient and some public sector employees might lose their jobs.
Well, the following is a completely true story that may make one reconsider taking the time off and updating their I.D. card:
My friend, Yossi lived with his parents and when he married, he moved with his wife to a different town. The town was a few hours travel from his parent’s house. He didn’t update his address on his I.D. card. He got a job in the new town and worked for the same employer for 3 years. One day Yossi gets a letter from Social Security (Bituach Leumi) saying he hasn’t paid social security for the past three years and failure to do so, as legally required by law, may result in fines or imprisonment.
Obviously, Yossi gets scared from the letter and shows up at the local Social Security office in the town where he lives. He brings with him his payslips from the last three years. On the payslips is Yossi’s full name, his Israeli I.D. number and his address of residence. Yossi shows the payslips to the clerk and to his astonishment he is told that the money that was deducted from his pay was not credited to his account because he does belong to this particular branch of Social Security, but rather in the town where his parents live !
The fact that all branches are connected via computer network and it seems just a silly beaurocratic issue, he was told that he needed to physically go into the local Interior Ministry office nad change his address and then travel to his former town, to the Social Security office and ask that his file be transferred to the new town. All his reasonable arguing to no avail. To top it off, while he is sitting in the Social Security office he gets a phone call from his wife who tells him that their car and some possesions have been confiscated by the Social Security office as collateral until he pays his due!
Needless to say, he had to take a day’s vacation and waste it on setting the records right with the authorities. After all is said and done, they actually refunded him 600 shekels that he was overcharged.
Food for thought.
1. The tax brackets that were in effect since Jan 2013 will remain in effect in 2014, unchanged.
10% up to 5,280 sh
14% from 5,281 sh – 9,010 sh
21% from 9,011 sh – 14,000 sh
31% from 14,001 sh – 20,000 sh
34% from 20,001 sh – 41,830 sh
48% from 41,831 sh – 67,630 sh
50% each additional sh.
2. The value of tax credit points remains unchanged at 218 sh.
3. The following tax amounts have been updated from Jan 2014:
A. Ceiling for employer’s contribution toward pension – 36,356 sh per month.
B. Expense for foreign expert – 330 sh per day.
C. Salary for foreign expert – 13,100 sh per month.
D. Ceiling for linked to consumer index only loans to employees – 7,800 sh. (any loan above this amount carries a mandatory interest rate of 4.31%
(+ v.a.t. where applicable).
E. Value added to taxable income for cell phone usage – 105 sh.
F. Ceiling for employer’s contribution toward Keren Hishtalmut – 15,712 sh per month.
G. Tax benefit for shift work: Ceiling – 10,710 sh. Tax credit 15% – up to 940 sh anually.
H. Ceiling for tax exemption from severance pay – 12,360 sh per year for amounts paid from 1.1.2014 onwards.
I. Income credits for deposits to Gemel/ Pension plan savings: section 45 – 169 sh per month, section 47 – 8,700 sh per month.
J. Value added to taxable income for company/leasing car (per month):
group 1 – 2,730 sh
group 2 – 2,960 sh
group 3 – 3,810 sh
group 4 – 4,570 sh
group 5 – 6,330 sh
group 6 – 8,200 sh
group 7 – 10,550 sh
L3 motorcycle (engine capacity over 125 cc and over 33 hp) – 910 sh
For cars first registered from Jan 1, 2010 onwards (linear module), the ceiling for list prices is 506,580 sh and the deduction for Hybrid cars is 560 sh.
K. Update for extra tax credit points for higher education (starting in Jan 2015):
Anyone completing an academic BA during 2014-2015, will be eligible for 1 additional tax credit point per month in the following tax year or the year after
(employee’s choice) .
Anyone completing an academic MBA during 2014-2015, will be eligible for 1/2 additional tax credit point per month in the following tax year or the year after
(employee’s choice) .
In fields where an apprenticeship is required, the employee can defer receipt of the additional tax credit point (or half point) to the tax year following the end of
apprenticeship.
Anyone completing an academic Phd in medicine or direct track, during 2014-2015, will be eligible for 1 additional tax credit point per month in the following
tax year or the year after (employee’s choice), and another 1/2 additional tax credit point per month in the year following.
In 2014, all employees claiming additional tax credit points for academic studies, must fill out the appropriate boxes on the 101 from, attach a tax form 119 and all required documents.
L. Tax discounts for settlements / border areas: Ceiling for section 11 (Kiryat Shmona, Eilat and confrontation line settlements – 241,320 sh annually.
Ceiling for residents of other communities as defined in section 11 B of the first section – 160,800 sh annually.
The validity of tax benefits to the southern confrontation line residents (Sderot and the western Negev) has been extended until Dec 31, 2014.
The following communities have been removed from the list of eligible places, effective 23.02.2014: Eilot regional council, Bet Shean, Hazor Haglilit, Arava
Tichona regional council. This section is not final and may be subject to change.
The tax discounts for settlements have changed from Jan 2014:
section 1 (north settlements) – 11% (in 2013 was 12%)
section 2 (Kiryat Shmona) – 22% (in 2013 was 24%)
section 3 A – (Mitzpeh Ramon) – 22% (in 2013 was 24%)
section 3B (Dimona and Yerucham) – 18% (in 2013 was 19%)
section 3C – 14% (in 2013 was 15%)
section 3D & 3E – 11% (in 2013 was 12%)
Employees who work at more than one place of employment and received a tax co-ordination, need to reapply before Feb 28, 2014, otherwise employers have been instructed to deduct maximum tax (currently 48%)!
Employer’s contribution rates towards Social Security (Bituach Leumi) for salaried employees, on the portion of salary over 60% of the average salary (currently 5,297 sh but due to be updated) will be 7% starting January 2014’s payroll (up until Dec 2013 it was 6.5%).
Israel’s Chief of Staff ordered a pay raise of 21% for all conscripted (sadir or chova) soldiers, starting in January 2014. Their pay has not been updated since 2002, while salaried employee’s pay has been updated a few times since then.
a few examples:
combat soldiers will earn 847 sh (700 sh- up until Dec 2013)
level A combat support soldiers will earn 618 sh ( 511 sh -up until Dec 2013)
non-combat soldiers will earn 426 sh (352 sh -up until Dec 2013)
Finally released via Amazon kindle – The 2013 updated version of the Tax Benefits for Salaried Employees in Israel, in English !
Just in time for the end of the tax year, find out if you have correctly utilized all the tax benefits you are entitled to, as a salaried employee.
If your employer failed to credit you or you were not aware of certain tax benefits that you qualify for, no worries !
Taxes are configured annually, so if you update your employer before December’s payroll is processed you will be credited retroactively to January 2013.
And if you weren’t able to update your employer’s payroll dept by Dec’s payroll, just file for a tax rebate.
The employee worked for a gardening company. Upon recieving his last payslip, he discovered that his daily rate had been reduced substantially !
He contacted the employer, demanding that his daily rate be restored to what it was previously, as no-one notified him of any change and he also did not agree to any such change.
The employer refused on several request attempts by the employee, stating that it was a simple “computer mistake” but the bottom line is the same. As a result the employee resigned his position and sued the employer in labor court, demanding his daily rate be restored, as well as severance pay and social benefits from the full rate and not partial from the new, reduced rate, as the employer calculated.
The employer countered, in his response to the court, that the employee resigned his position and as such is not entitled to severance pay. In addition, the employer requested that the employee pay him for failure to give 30 days advance notice.
The court ruled that relevance of section 11a of the severance pay law, which enables an employee to resign his position and still be eligible for severance pay, is upon the employee.
Basically, the employee was able to prove that the employer single-sidedly reduced his wages, by submitting photocopies of his payslips to the court as evidence.
Reducing salary is considered a “worsening of work conditions” that an employee is not expected to continue working under.
The employer stated to the court that after amendment 24 to the “protection of salary” law in 2008, the employer was instructed by his bookkeepers and legal advisors to itemize all payments on the payslips, instead of the one line – “salary” which was used up until then. The employer “fixed” this by lowering the salary rate and adding other mandatory items seperately, such as travel expense and Havra’a. The court ruled that these other items should have been added in addition to the existing pay and not all inclusive, since the item listed was only salary.
The court awarded the employee full severance pay and the employer was instructed to pay the employee the remainder of his salary (restore the original rate) and the social benefits from the full amount, as well as back pay (from his start of employment) for travel and Havra’a.
It pays for employers to configure payslips properly, according to the law, and avoid such scenarios.
Effective from April 2013’s payroll the minimum wages will be updated as follows:
Monthly rated employees
| Apprentices | 2,580.- |
| up to age 16 | 3,010.- |
| from age 16 to age 17 | 3,225.- |
| from age 17 to age 18 | 3,569.- |
| age 18 and up | 4,300.- |
Daily rated employees
| 5 day work-week | 6 day work-week | |
| Apprentices |
119.08 |
103.20 |
| up to age 16 |
138.92 |
120.40 |
| from age 16 to age 17 |
148.85 |
129.- |
| from age 17 to age 18 |
164.72 |
142.76 |
| age 18 and up |
198.46 |
172.- |
Hourly rated employees
| Apprentices | 14.91 |
| up to age 16 | 17.40 |
| from age 16 to age 17 | 18.64 |
| from age 17 to age 18 | 20.63 |
| age 18 and up | 23.12 |
These rates are mandatory for all employees in Israel, regardless of sector (public and private), industry, vocation or tenure.
Employers who pay less than the above minimum wages risks penalty (stiff fines and even imprisonment) and prosecution in Labor court, by the Ministry of Industry, Trade and Labor, as a criminal felony for violation of Labor laws.
