- Saturday
The law freezing and reducing”recovery” pay (“avraha”) for 2025 has not yet come into effect. “Recovery” days (“avraha”) should not be deducted or frozen in 2025 until the law comes into effect
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- Saturday
The validity of the Income Tax Regulations (Tax Rate on Income from Shift Work), 1986, has not been extended. The tax credit for shift work has been abolished
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- Saturday
The tax brackets and the value of the credit point for 2025 remain unchanged. The freeze on the tax brackets is valid until 2027
The tax brackets have been frozen for the next three years. The value of the credit point remains unchanged at 242 NIS.
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- Monday
The change in default pension funds for the period from 01/11/24 to 31/10/28.
On September 19, 2024, the “Capital Market, Insurance and Savings Authority” announced the winners of the tender for default pension funds. The winning pension funds are Infinity, Altshuler Shaham, Mor, and Meitav.
Unlike previous tenders, where the funds were selected for three years, this tender is valid for four years, from November 1, 2024, to October 31, 2028.
– The management fees remain unchanged: 1% of contributions and 0.22% of accrued savings.
– Contrary to the previous method, where employers could choose a specific default pension fund to work with, from June 1, 2025, employers with 50 or more employees will need to check if they are subject to a restriction. Under this restriction, they can enroll employees who haven’t chosen a pension fund only in a default fund based on the check digit of the employee’s ID number.
A pension fund that receives an enrollment request for an employee whose ID check digit does not match the allocation table below may decline to enroll them.
The regulatory change applies only to new members.
Below is the allocation mechanism for members according to the ID check digit:
ID Check Digit | Selected Pension Fund |
7, 8, 9 | Infinity |
4, 5, 6 | Mor |
2, 3 | Altshuler Shaham |
0, 1 | Meitav |
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- Monday
The increase in VAT from 17% to 18%, effective from 01/01/25, was approved in the second and third readings.
The measure, which will increase the cost of living but also bring approximately 7.2 billion shekels into the state treasury, was approved despite opposition, even within the coalition.
It is necessary to implement all relevant configurations in accounting and payroll software.
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- Friday
On July 16, 2024, the Israeli Knesset approved the amendment to the “Savings for Every Child” program in its second and third readings
In 2017, Moshe Kahlon, the Minister of Finance at that time, initiated the Savings for Every Child program as part of the implementation of the National Insurance Law. According to this program, the 57 NIS paid every month by National Insurance can be saved for each child from birth until the age of 18, when the money becomes liquid and can be withdrawn. Those who decide to leave the money until the age of 21 can withdraw it at that age with the addition of the last grant amounting to 568 NIS from National Insurance. When the program was launched, a bank deposit was defined as the default savings option. However, parents could actively choose to direct the money into a savings plan in a provident fund. Thus, those who did not take this active step had their money automatically deposited into a bank deposit. The same applied when parents struggled to decide regarding the provident fund and preferred the familiar bank deposit route. It was not possible to change the investment route. Furthermore, if the funds for the firstborn child were saved in a bank deposit, the funds for all subsequent siblings were also automatically deposited into a bank deposit. Seven years have passed since the program’s implementation, and the initial results show an unreasonable situation: children whose program funds were deposited in a bank deposit end up with a sum of money three times lower than the amount received by children whose funds were deposited in a provident fund. The change, led over several years by Lobby 99, dramatically alters the picture:
- From the beginning of the fiscal year, parents will be able to transfer future deposits from the bank deposit to a provident fund (i.e., what was deposited in the bank deposit will remain there, and all future deposits will be made to a provident fund).
- The provident fund becomes the default option for the Savings for Every Child program (characteristic of long-term savings,- which is preferable in capital market-related products).
- Even if a bank deposit was chosen for the firstborn child, subsequent siblings can save in a provident fund.
These changes can be made through the National Insurance website, and it is estimated that they will be available from the beginning of the fiscal year. We hope that the changes will take effect from the 2025 fiscal year, and of course, we will update you with the exact details.
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- Thursday
Sick Pay Regulations
On June 10, 2024, the Labor and Welfare Committee of the Knesset approved an amendment to the Sick Pay Regulations of 2024 with the aim of easing the burden on the healthcare system by allowing the issuance of a sick leave certificate without the doctor’s examination and signature, subject to the following restrictions:
- The sick leave certificate is for a short-term period of up to 4 days in total within a period of 7 consecutive days.
- Such certificates can be issued for a total of up to 10 days in a year and up to 4 times/certificates per year.
- A sick leave certificate for a period exceeding 4 days will be issued only by a doctor’s visit, which can be conducted via a phone call or another method established by the regulations, not just by visiting the clinic (e.g., hybrid medicine).
- A sick leave certificate without the doctor’s examination for a period exceeding 4 days will be issued if there is a record of the patient’s current health condition (e.g., recovery after surgery).
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- Friday
06/06/24: Implementation of the “Payment Services Regulation and Payment Initiation Law”
The law will allow fintech companies to obtain licenses to provide payment services to the public. The aim of the law is to increase competition in the payment market.
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- Friday
Implementation of the “Freeze and Reduction of Recuperation Pay in 2024 for Budgeting Benefits for Reservists Act, 2024” effective from 18/03/24
The law deals with the deduction of one recuperation day value for each employee eligible for recuperation pay this year (for part-time and partial period for which recuperation is paid, the deduction is calculated proportionally. For those receiving 5 recuperation days this year and whose full-time salary does not exceed 6,000 NIS, 0.5 recuperation day will be deducted) and freezing the value of the recuperation day for 2024 (if an employer is obligated to increase the value of the recuperation day in 2024, they are required not to pay the difference to employees but to transfer it to the tax authorities (Income Tax is responsible for the implementation of the law)).
A summary of the law’s implementation that we prepared especially for you can be seen on our Facebook page.
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- Friday
The “Assistance to Parents of Children up to Age 3 (Legislative Amendments), 2024” Law Comes into Effect
The “Assistance to Parents of Children up to Age 3 (Legislative Amendments), 2024” law has come into effect. According to the law, starting from the 2024 tax year, additional tax credit points (!) will be calculated for parents for each child from the year of birth until the year the child turns 3, as follows:
- For each child in the year of birth, one tax credit point will be added for each parent.
- For each child who is one or two years old in the tax year, 2 tax credit points will be added for each parent.
- For each child who turns three years old in the tax year, one tax credit point will be added for each parent.
Since typically women’s income decreases in the tax year in which they give birth and they do not utilize the tax credit points due to low tax liabilities, Income Tax allows the woman to transfer one out of the 2.5 points she is entitled to, to the next tax year.
Note: The additional tax credit points are for both parents! For example, two parents of a two-year-old child will receive an additional 4 tax credit points. If they meet the relevant tax liabilities, they will benefit monthly from the following addition: (2+2) * 242 = 968 NIS (242 NIS is the value of a tax credit point in 2024).
The amendment to the law is retroactive from 01/01/24, and parents will see a significant increase in their net salary starting from the 4/24 payslip. Attached is a comparison table of tax credit points before and after the change.
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- Friday
“Israel Invoices” Regulation
Due to numerous requests, the Tax Authority is postponing the implementation of the “Israel Invoices” regulation to 05/05/24.
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- Friday
Signing of a Collective Agreement for Reservists and Their Families
The agreement has been signed to provide up to 8 paid leave days for the spouses of reservists, compensation payment to employers amounting to 20% of a reservist’s salary (covering social contributions), and protection against dismissal for reservists serving more than 60 days.
Effective Date: 45 days from the signing of the agreement. This period may be shortened due to the urgency of the matter.
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- Friday
“Israel Invoices” Module
The “Israel Invoices” model is designed to reduce the phenomenon of fictitious invoices, which causes billions of shekels in damage to the state treasury every year. The regulation’s effective date is set for 01.04.24.
The president of the Institute of Certified Public Accountants, Mr. Chen Shreiber, is actively working to delay the regulation’s implementation. On 19/02/24, he met with Finance Minister Bezalel Smotrich. All the issues raised by representatives and companies regarding the practical implementation of “Israel Invoices” were presented to the minister, who showed openness and listened to the concerns.
Significant regulatory easements for the implementation of the model were agreed upon, and accordingly, the guidelines on the matter, which the Tax Authority disseminated to the public, were amended. This will significantly ease and reduce bureaucracy for both representatives and business owners.
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- Sunday
raising the minimum wage
On April 1, 2024, the minimum wage should rise to 5,880 NIS following the increase of the average wage in the economy to 12,379 NIS.
This is an automatic update mechanism according to the Minimum Wage Law, according to which the minimum wage per month is 47.5% of the average wage as defined in Section 1 of the National Insurance Law (combined version), 1995-55, as it is on April 1 of each year and as it is increased According to the minimum wage law.
In January, the Chairman of the Presidency of the Business Sector Dobi Amitai addressed Finance Minister Smotrich and requested that he order a freeze on the linking to the average wage until the end of the year: “a significant burden on employers”
As a reminder, the minimum wage increase does not apply retroactively.