As we step into 2025, it’s crucial for businesses operating in Israel or employing Israeli talent through Employer of Record (EoR) solutions to stay informed about the latest updates in Israeli taxes, pensions, and other deductions. Here’s a breakdown of the changes that may impact your operations, with a particular focus on implications for foreign experts.
Key Updates for 2025
- Average Wage Adjustments
- The average monthly wage in Israel has been updated to 13,316 ILS.
- For foreign experts, whose visa requirements include earning at least two times the average wage, this means a new minimum base salary of 26,632 ILS per month.
- Taxable Income and Marginal Rates
Tax Bracket | Income Range (ILS) | Tax Rate |
Up to 7,010 | 0 – 7,010 | 10% |
7,011 – 10,060 | 7,011 – 10,060 | 14% |
10,061 – 16,150 | 10,061 – 16,150 | 20% |
16,151 – 22,870 | 16,151 – 22,870 | 31% |
22,871 – 54,300 | 22,871 – 54,300 | 35% |
54,301 – 75,480 | 54,301 – 75,480 | 47% |
Above 75,481 | 75,481+ | 50% |
- Education Funds for Salaried Employees
- Salaried employees can benefit from updated contribution caps to education funds, a popular tax-advantaged savings program in Israel. The monthly contribution cap for salaried employees now stands at 15,712 ILS. This allows employees to save towards professional development and educational goals while benefiting from tax exemptions.
What This Means for Employers Using EoR Services
- Visa Compliance for Foreign Experts: Employers engaging foreign experts must ensure that salaries align with the updated requirement of twice the average wage to meet visa stipulations.
- Budgeting for Payroll and Benefits: Updates to pension ceilings and tax brackets may impact overall payroll costs. Accurate calculations are essential to remain compliant while managing expenses effectively.
- Tax Planning: Both employers and employees should reassess tax liabilities under the new marginal tax rates and deductions.
How CWS Israel Can Support You
Navigating these updates can be complex, but our EoR solutions are designed to simplify compliance. From managing payroll adjustments to ensuring visa requirements are met, we provide expert guidance tailored to your business needs.
If you have questions about how these changes may affect your operations, feel free to reach out to our team for personalised support.
Stay ahead in 2025 by partnering with experts who understand the nuances of Israeli labour and tax law. Contact us today!