Tax in Israel: VAT, income tax, company tax, capital gains
18%
Israel charges 18% VAT on most goods and services. The rate is verified against Knesset (Israeli legislature) on 20 August 2026; the top personal income-tax rate is 50% (2026 tax year, taxes-refund.co.il (secondary; Israel Tax Authority not reachable)), and the headline company tax rate is 23% (OECD Corporate Tax Statistics).
VAT in Israel
Value-added: VAT is charged on sales and reclaimed on purchases, so only the added value is taxed.
- Standard rate
- 18%
- Local name
- VAT — Value Added Tax
- Type
- VAT
- Reduced rates
- None on record
- Filing
- Quarterly / Monthly / Annual
- Authority
- Knesset (Israeli legislature)
- Current rate since
- 1 January 2025
Introduced 1976 (at an 8% standard rate)
Israel introduced VAT in 1976 at 8%. Since then the standard rate has moved between 8% and 18%, the ceiling it returned to on 1 January 2025. Two long-standing carve-outs survive every change: fresh fruit and vegetables, and the resort city of Eilat, which is treated as outside the VAT system altogether.
What it replaced: A patchwork of earlier indirect levies; VAT arrived in 1976 at 8% and has never gone above 18%.
Income tax in Israel
The top personal income-tax band is 50% for the 2026 tax year.
Company tax in Israel
The headline corporate income tax rate is 23%. In effect since 1 January 2026.
Indicative only: confirm with Israel's national tax authority. OECD 2025: central statutory CIT 23%, combined (central+sub-central) 23%; sub-central CIT 0%
Capital gains tax in Israel
- Shares
- 25% of the real (inflation-adjusted) gain for individuals on shares acquired on or after 1 Jan 2003; 30% where the seller is a substantial (10%+) shareholder at sale or in the preceding 12 months
- Property
- Land Appreciation Tax (Mas Shevach) 25% of the real gain for individuals on real estate acquired from 1 Jan 2012 (older holdings: linear apportionment - marginal rate pre-7 Nov 2001, 20% to 31 Dec 2011, 25% thereafter)
- Holding period
- none for post-2003 acquisitions (pre-2003 acquisitions use a time-apportioned blend of marginal and flat rates)
Did you know? Israel tax facts
Buy a fridge in Eilat and there is no VAT on it: the Red Sea resort city sits outside Israel's VAT system entirely, and fresh fruit and vegetables are untaxed everywhere in the country.
Everything else moved from 17% to 18% on 1 January 2025 to help close a budget deficit that had reached 8.1% of GDP, at an estimated cost to a household of 1,000–2,000 shekels a year.
Source: JNS — Israel raises VAT to 18% as part of effort to rein in deficit ↗Israel's VAT started life at 8% in 1976 and has never once been set above 18% — the exact ceiling it climbed back to at the start of 2025.
The OECD's record shows the minimum and maximum standard rates since 1976 have been 8.0% and 18.0%. Israel also runs a zero rate on a number of goods and services plus a specific regional rate — the Eilat exemption.
Source: OECD Consumption Tax Trends — Israel ↗New immigrants to Israel and returning residents pay no Israeli tax for ten years on income earned outside Israel.
Wikipedia: 'Returning residents and new immigrants are exempt from taxes for 10 years on income generated outside Israel'; the 2024 income tax table runs from 10% to 50%, the top rate applying to income 'over 721,560' shekels a year, and the corporate rate was cut to 24% on 1 January 2017 and 23% on 1 January 2018.
Source: Wikipedia — Taxation in Israel · checked 10 October 2026 ↗
More stories, for every country that has one, on the tax facts page.
Ask your AI assistant about tax in Israel
The figures on this page are callable by any MCP-compatible assistant through the free Tax MCP. Add https://taxmcp.ai2fin.com as a custom connector in Claude, ChatGPT, Cursor or your own agent — no login, no API key — then ask:
- “What is the VAT rate in Israel, and what is the source?”
- “Estimate income tax in Israel on ILS 60,000 for 2026.”
- “What is the company tax rate in Israel and how is it sourced?”
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Israel, answered
Questions about tax in Israel
- What is the VAT rate in Israel?
- The standard VAT (Value Added Tax) rate in Israel is 18%, verified against Knesset (Israeli legislature) on 20 August 2026. Value-added: VAT is charged on sales and reclaimed on purchases, so only the added value is taxed.
- What is the top income tax rate in Israel?
- The top personal income-tax band in Israel is 50% for the 2026 tax year, as published by taxes-refund.co.il (secondary; Israel Tax Authority not reachable) (checked 6 October 2026, verification pending). The free income-tax calculator on this site works through the bands below it, and shows the rate table it used.
- What is the company tax rate in Israel?
- The headline corporate income tax rate in Israel is 23%, as published by OECD Corporate Tax Statistics (checked 6 October 2026, verification pending). Indicative only: confirm with Israel's national tax authority. OECD 2025: central statutory CIT 23%, combined (central+sub-central) 23%; sub-central CIT 0%
- How is capital gains tax charged in Israel?
- In Israel, gains are taxed at their own rate, separate from income, as published by PwC Worldwide Tax Summaries - Israel individual income determination (checked 6 October 2026, verification pending). On shares: 25% of the real (inflation-adjusted) gain for individuals on shares acquired on or after 1 Jan 2003; 30% where the seller is a substantial (10%+) shareholder at sale or in the preceding 12 months Holding period: none for post-2003 acquisitions (pre-2003 acquisitions use a time-apportioned blend of marginal and flat rates)
- Can an AI assistant look up tax rates for Israel?
- Yes. The free Tax MCP at https://taxmcp.ai2fin.com gives Claude, ChatGPT, Cursor or any MCP-compatible agent the same sourced figures as this page: the VAT rate, an income-tax estimate, the company tax rate, the capital gains rule and a side-by-side comparison with other countries, each answer citing the authority and the date it was checked. Add the endpoint as a custom connector; there is no login or API key.
Sources
- Knesset (Israeli legislature)
- taxes-refund.co.il (secondary; Israel Tax Authority not reachable)
- OECD Corporate Tax Statistics
- PwC Worldwide Tax Summaries - Israel individual income determination
- JNS — Israel raises VAT to 18% as part of effort to rein in deficit
- OECD Consumption Tax Trends — Israel
- Wikipedia — Taxation in Israel
Last checked 10 October 2026. General information computed from published government rates, not tax advice. Check the linked authority or a registered adviser before relying on a figure.
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