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7 August 2013

Income tax rates going up

As part of the new budget, taxes are rising across the board.

We have already seen an increase in the VAT rate and property taxes are going up  as well. Now, income taxes on earned income (e.g. salary, pensions & self-employment income etc.) are joining the club - in addition to the increases that already came into effect for 2013.

The three lowest bands of tax are increasing by 1% each, the fourth band is going up by 1.4% and there is a 2% increase for the two highest bands.

A more subtle hit that has been announced is that the annual inflationary increases in the tax bands and the value of credit-points is being cancelled for 2014.

Corporations will see their income taxed at 26.5%, up from 25%.

Overall, the implication is that more people will be paying tax, and those already paying will see even less of their income in their pockets.

The following table summarises the tax bands and rates for both 2013 & 2014.
 
Amount (NIS yearly)
2013 tax rates
2014 tax rates
Up to 63,360
10%
11%
63,361 – 108,120
14%
15%
108,121 – 168,000
21%
22%
168,001 – 240,000
31%
32.4%
240,001 – 501,960
34%
36%
Thereafter
48%
50%
A single credit-point is worth NIS 2,616 per annum.

 
A number of other amendments were announced in the new law, most of which are beyond the scope of this blog (at this time).

However, one point to note is that the credit-points given on completion of academic studies (see here) will be cancelled for those finishing in 2016 and onwards. Those who complete their studies by the end of 2013 will be under the old rules. Those finishing in either 2014 or 2015 will get fewer points for fewer years; the exact configuration based on the type of study completed and the number of years spent studying.

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