Israel self-employed tax calculator 2026

How tax is calculated for the self-employed in Israel in 2026

A self-employed person (atzmai) pays three things on profit: income tax, National Insurance (Bituach Leumi) contributions and health insurance contributions. Profit is business revenue minus deductible expenses. An osek patur and an osek murshe follow the same rules; the only difference between them is VAT.

Income tax brackets for 2026

Income tax is charged in brackets: each rate applies only to the part of income inside that bracket. Section 121 of the Income Tax Ordinance was amended on 31 March 2026, widening the 20% and 31% brackets from 1 January 2026. These are the brackets for income from personal exertion, which includes business income where the owner works in the business:

Taxable income above ₪721,560 a year (₪60,130 a month) also pays a 3% surtax, so the top shekel is taxed at 50%.

Credit points

Credit points are subtracted from the tax worked out by the brackets. In 2026 a point is worth ₪2,904 a year, ₪242 a month. Every Israeli resident gets 2.25 points; a woman gets another half point, so 2.75. Children, an academic degree, army discharge, aliyah and combat reserve duty add points. When the points are worth more than the tax, the tax is 0 and the remainder is not refunded.

National Insurance and health insurance

National Insurance calculates a self-employed person’s contributions in two tiers of monthly income:

• Up to ₪7,703 a month: 4.47% National Insurance and 3.23% health insurance, 7.7% in total.
• From ₪7,703 up to ₪51,910 a month: 12.83% National Insurance and 5.17% health, 18% in total.
• No contributions are paid on income above ₪51,910 a month.
• Anyone whose income is below ₪3,442 a month pays on a minimum income of ₪3,442.

The income on which contributions are calculated is profit minus 52% of the National Insurance contributions themselves, not including health. The same 52% is also deductible for income tax under section 47A of the Ordinance, and the calculator subtracts it from taxable income.

Worked example: ₪150,000 profit a year

A self-employed man with ₪180,000 revenue and ₪30,000 deductible expenses in 2026, with no extra credit points:

1. Profit: 180,000 minus 30,000 = ₪150,000.
2. National Insurance base, after deducting 52% of National Insurance contributions: ₪144,386.
3. National Insurance: 92,436 × 4.47% = ₪4,132, plus 51,950 × 12.83% = ₪6,665. Total ₪10,797.
4. Health insurance: 92,436 × 3.23% = ₪2,986, plus 51,950 × 5.17% = ₪2,686. Total ₪5,672.
5. Taxable income: 150,000 minus ₪5,614 (52% of ₪10,797) = ₪144,386.
6. Tax by brackets: 84,120 × 10% = ₪8,412, plus 36,600 × 14% = ₪5,124, plus 23,666 × 20% = ₪4,733. Total ₪18,269.
7. Minus 2.25 credit points, ₪6,534: income tax of ₪11,735.

That is ₪28,204 in total, 18.8% of profit. He keeps ₪121,796 a year, about ₪10,150 a month. Estimated advances: about ₪978 a month for income tax, roughly 6.5% of turnover, and about ₪1,372 a month for National Insurance and health.

What the calculator leaves out

The estimate is for an Israeli tax resident aged 18 up to retirement age whose business is their only income. It does not include:

• Pension and study fund (keren hishtalmut) deposits, which reduce tax. If you make them, your real tax will be lower.
• Special credits, such as for children, a degree, aliyah, reserve duty and donations. You can add points by hand.
• Tax benefits for residents of qualifying localities (section 11 of the Ordinance).
• A salary in the same year: salaried and self-employed income are taxed together by the brackets.
• Non-exertion income such as rent, interest and capital gains, which have other rates.
• People past retirement age, who pay National Insurance at different rates.

New immigrants (olim) and returning residents may have additional credit points and, in some cases, exemptions on foreign income; check these with an accountant. The calculator is not a tax return and not tax advice.

Sources

• National Insurance Institute (Bituach Leumi): contribution rates for the self-employed, reduced-rate threshold, ceiling and minimum income from 1 January 2026
• National Insurance Institute (Bituach Leumi): worked example of self-employed contributions, including the 52% deduction
• Israel Tax Authority: income tax tables for January 2026 onwards, updated April 2026 (copy of the Tax Authority booklet)
• Income Tax Ordinance: sections 121 and 121B (2026 brackets and surtax), 34 and 36 (credit points), 47A, 175 and 180