For anyone who’s ever lived in Israel, you know that one of the most perplexing things about moving here is learning to understand your Israeli salary stub. If you’re not used to seeing things like “brutto” and “netto,” it can be pretty confusing. Here’s a quick guide to understanding the salary in Israel and how your payslip works.
The Israeli Salary Stub Is Very Different from What You’re Used To
Understanding Israeli salary stubs can be confusing at first, but don’t worry — it’s actually simpler than it looks! In comparison to the US salary stub, where taxes are taken out before you receive your monthly check, the Israeli salary system deducts taxes differently. Your salary in Israel is listed on the top right and bottom right corners of the payslip — once with all of the government deductions included, and once showing just your take-home pay.
To navigate this landscape, research is essential since there are often discrepancies between what an employee’s expected take-home salary in Israel should look like and what their actual stub reads. There may be benefits or extras listed as well that you would want to investigate further. Understanding your Israeli salary payslip will help you plan better for your financial future.
In Israel, Your Employer Withholds Money for Taxes and Social Security
Working in Israel can be a great experience with employment opportunities that offer exciting challenges. But don’t forget to factor taxes and social security payments into your salary in Israel — your employer will take care of the deductions upfront. Depending on your salary and the rules in your field, this amount may vary significantly — so ask for a breakdown of what you’ll actually receive after all deductions are factored in.
The Amount Withheld Depends on What You Earn
Figuring out your Israeli salary deductions can be overwhelming. The amount that is taken out of your paycheck depends on what you earn and whether you have any deductions. For example, if you make a decent amount but decide to itemize deductions, there may be less withheld. It’s important to take all factors into account to ensure that the correct amount is being withheld from your salary in Israel.
Sections in the Israeli Salary Stub (Tlush Maskoret)
Imagine receiving your Israeli salary payslip and being confused about what all the information actually means. It’s a common feeling. First off, “gross salary” refers to your overall earnings each month before deductions are taken out of your salary in Israel.
Deduction categories are listed next — insurance, pension, and taxes among other things depending on the job position. After these amounts have been subtracted from your gross salary in Israel, you arrive at your net wages — what you actually take home. Let’s learn them in detail:
a. Gross Pay (Brutto)
Gross pay is your total salary in Israel before any taxes or deductions are taken out. Net pay is what you take home after all deductions and taxes have been removed. Understanding the difference is key to managing your money and knowing how much you actually bring in each month.
b. Overtime Pay
Overtime shows how many hours you worked outside regular work time. These have higher rates, multiplied by the amount of extra time worked. Israeli labor law requires that overtime be paid at 125% for the first two hours and 150% thereafter.
c. Convalescence Pay (Dmei Havraa)
All employees who have worked at least a year have the right to convalescence pay, called Dmei Havraa. This type of payment appears on your Israeli salary payslip and helps ensure those recovering from an illness or injury have access to financial resources.
d. 13th Month Salary
The 13th month salary is a welcome bonus for many employees in Israel. It is usually the equivalent of one month’s salary in Israel and is a way for companies to express appreciation. Even if it’s not an incredibly large amount, the 13th month salary makes a nice difference in many people’s lives.
e. Transportation Allowance
Transportation allowances are a common feature of the Israeli salary system. Employers are required to cover commuting costs — approximately 22.60 NIS per day or your monthly bus ticket to work. This amount appears as a line item on your Israeli salary payslip.
f. Income Tax (Mas Hachnasa)
Income tax is a significant deduction from your salary in Israel. It’s essential to stay on top of the various tax changes and deductions affecting your financial situation. Israel has a progressive tax system — the more you earn, the higher the rate applied to the upper portion of your salary in Israel.
g. National Insurance (Bituach Leumi)
This is approximately 5% of gross pay, paid by the employer on your behalf. National insurance contributions on your Israeli salary payslip fund retirement pensions, unemployment benefits, and many other vital services. New Olim often receive reduced Bituach Leumi rates during their first years — check your payslip to verify you are being charged the correct rate.
h. Health Insurance
Health insurance is also approximately 5% of gross pay and appears on every Israeli salary stub. It’s one of the most important lines on your payslip — these contributions fund your kupat cholim (health fund) membership. Remember to review your coverage annually to make sure you’re getting the best plan for your needs.
i. Pension (Keren Pensia)
Pension plans are a mandatory part of the Israeli salary system. The employer contributes 6.5% of the salary and the employee contributes 6%, generally paid on base salary only. By making contributions each month, you build an income for retirement. Your Israeli salary payslip will show both your contribution and your employer’s contribution separately.
j. Education Fund (Keren Hishtalmut)
Known as Keren Hishtalmut, this program allows both employers and employees to contribute a portion of the worker’s salary in Israel toward an education fund. Employees pay 2.5%, while employers typically contribute 5% or 7.5%. It is one of the most tax-efficient savings vehicles available in Israel — after six years, withdrawals are tax-free.
Your Net Pay (Netto)
After taxes and social security are deducted, your net salary in Israel will be deposited into your bank account. Keep in mind that the Israeli salary payslip is showing you the full picture — the difference between gross and net can be significant depending on your income level and deductions.
When you first receive your salary stub from your employer in Israel, some of those numbers may look impressive. But after taxes, insurance deductions, and other workplace-related expenses are accounted for, your actual take-home salary in Israel will be lower. Understanding how much you’ll actually have access to is key to budgeting properly.
If You Need Any Help, Reach Out to Olim Paveway
Understanding the Israeli salary stub and how it works is essential for anyone moving to Israel. It can be difficult to figure out all the deductions and payments that get taken out of your salary in Israel, but once you understand the system, you’ll have a much better grasp of your financial situation. Keep up with any changes to Israeli tax laws as they occur.
If you’re unsure of what to do next and need assistance, Olim Paveway is a great resource. With years of experience helping Olim navigate life in Israel — including understanding their salary in Israel and Israeli payslip — we are definitely the ones to turn to when you find yourself stuck.
Moving to a new country can be intimidating and confusing, but with enough research and guidance from experts, it doesn’t have to be. Understanding as much as possible about your salary in Israel before you make this big move will leave you feeling prepared and ready for whatever comes your way.