Israel

Israel uses a progressive income tax system with seven brackets, ranging from 10% on income up to ILS 84,120 to 50% on income above ILS 721,560 (including the 3% surcharge on high income). Tax credits (nekudot zikui) reduce tax liability: residents receive 2.75 credit points (2.25 for men, 2.75 for women), each worth ILS 2,904 annually. Social insurance (Bituach Leumi) contributions are 3.5% on income up to 60% of the average wage, and 12% on income between 60% and the maximum (approximately ILS 49,030 per month). Health insurance contributions are 3.1% and 5% on the same brackets. Employer contributions add pension (6.5%), severance (8.33%), and disability insurance. Israel mandates pension contributions: minimum 6% employee and 6.5% employer, plus 8.33% employer contribution to severance fund. Combined with social insurance, total employment costs are approximately 20-25% above gross salary. Capital gains are taxed at 25% (30% for significant shareholders). VAT is 17%. The corporate tax rate is 23%. Israel's innovation incentives include the Angel Law for startup investors and R&D grants through the Innovation Authority.