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Do new immigrants (olim) get extra income tax credit points in Israel?

Yes. Section 35 of the Income Tax Ordinance grants a new immigrant additional credit points for 42 months from the date of aliyah. The entitlement is a quarter of a point for each of the first 18 months, a sixth of a point for each of the next 12 months and a twelfth of a point for each of the final 12 months. A credit point reduces the tax bill directly, shekel for shekel, rather than reducing taxable income. The points are claimed through the employer on Form 101, supported by the teudat oleh, or on the annual return for the self-employed.

Israel calculates income tax at graduated rates and then subtracts credit points (nekudot zikuy), each worth a fixed monthly amount that is updated for inflation every year. Every resident receives a base entitlement, and Section 35 of the Income Tax Ordinance [New Version] adds the temporary immigrant entitlement on top of it. The benefit runs for 42 months from the date of immigration, and months spent in full-time Hebrew study at an ulpan or in regular military service can be excluded from that count so the entitlement is not consumed while the immigrant has little or no income. Returning residents who meet the conditions for toshav chozer vatik receive a comparable entitlement under regulations made under the same section.

The points are never applied automatically. A new employee must file Form 101 at the start of employment and attach the teudat oleh, and an employer that receives neither will withhold at the higher rate. An oleh who was entitled but did not claim can generally file amended returns and recover the overpayment for the previous six tax years. Our guide to tax credit points in Israel sets out the full table of base and situational entitlements. Because credit points can only reduce tax to zero and are never refunded in cash, an immigrant earning little in the first year may gain nothing from them, which is exactly why the ulpan and military deferral of the 42-month clock matters.

⚖ In Practice
  • Governing law: Section 35, Income Tax Ordinance [New Version], and the regulations made under it for olim and returning residents
  • Competent authority: Israel Tax Authority (Rashut HaMisim BeYisrael)
  • Value: approximately NIS 250 per full credit point per month (2026), updated annually for inflation
  • Entitlement period: 42 months from the date of aliyah: a quarter point per month for 18 months, then a sixth for 12 months, then a twelfth for 12 months
  • How to claim: Form 101 filed with the employer together with the teudat oleh; self-employed claim on the annual return (Form 1301)
  • Missed claims: amended claims for unclaimed points are generally accepted for the previous 6 tax years

From the full guide: Tax Credit Points in Israel (Nekudot Zikuy): A 2026 Guide for Foreign Workers and New Immigrants

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Get a Free Consultation with Adv. Eli ShimonyPrepared under the direction of Adv. Eli Shimony, Eli Shimony Law Office · Editorial policy

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