Before you start

A determination of whether you are an Israeli tax resident (center-of-life test; 183-day or 425-day/3-year presumptions) — being physically in Tel Aviv long enough usually triggers it
Teudat Zehut (national ID) if you have made aliyah, or passport/visa details; a Tik Nikui (tax file) is opened via your employer for PAYE or by you if self-employed

Step-by-step

1
Confirm residency and whether the 10-year olim exemption applies to you
Israel taxes residents on worldwide income; the test is your 'center of life' (family, home, economic ties), with a presumption of residency if you spend 183+ days in a tax year, or 30+ days that year totalling 425+ over three years. If you made aliyah or qualify as a senior returning resident, your foreign-source income and foreign capital gains are exempt for 10 years — but note the parallel reporting exemption was abolished for anyone becoming resident on/after 1 Jan 2026, who must now disclose (not tax) foreign assets/income.
OnlineWho: All newcomers; olim/returning residents confirm status with Misrad HaKlita and the Tax AuthorityDetermine before your first Israeli tax year ends (calendar year)Free (self-assessment); accountant advice optional
2
If employed: get set up for PAYE withholding via your employer
Employees are taxed at source — your employer withholds income tax (10/14/20/31/35/47%, plus 3% surtax on very high income), National Insurance and health tax each month and files on your behalf. Submit Form 101 (employee declaration) at the start of employment and each year so credit points and deductions are applied. Most employees never file an annual return unless they have additional income or cross high-earner thresholds.
Via employerWho: Salaried remote workers and locally employed staffForm 101 at hire and each January; withholding is monthlyNo filing fee; tax/insurance deducted from salary
3
If self-employed/freelance: register with the Tax Authority and VAT
Open files at Rashut HaMisim (income tax) and Ma'am (VAT), plus Bituach Leumi. Choose osek patur (VAT-exempt small dealer, turnover under ~₪120,000/yr — files an annual declaration, charges no VAT) or osek murshe (charges VAT, files periodically). Standard VAT (Ma'am) is ~18%, raised from 17% on 1 Jan 2025. Note: olim foreign-source business income can fall under the 10-year exemption, but Israeli-source freelance income is fully taxable.
In personWho: Freelancers, consultants, contractors, business ownersRegister before issuing first invoice; ~1-2 weeks to set up filesRegistration free; bookkeeping/accountant typically ₪400-1,500/mo (~US$110-410)
4
File the annual return where required (self-employed, high earners, foreign income)
The tax year is the calendar year. Self-employed, those with capital gains (generally 25%, or 30% for 10%+ shareholders), foreign-source income outside an exemption, or high earners file an annual return (Form 1301) with the Israel Tax Authority, increasingly via the SHA'AM online system or an accountant. US citizens still file a US return and FBAR/FATCA reports — the US–Israel tax treaty and foreign tax credits prevent most double taxation but do not remove the US filing duty.
OnlineWho: Self-employed, high earners, those with capital gains or non-exempt foreign income; dual US nationals also file in the USGenerally by 30 April; extensions common for represented filersReturn free to file; accountant prep commonly ₪1,500-4,000 (~US$410-1,090)

Documents you’ll need

Teudat Zehut (national ID) or passport and visa/residency proof
Form 101 (employee) or Tik Osek registration (self-employed)
Teudat Ole / returning-resident confirmation if claiming the 10-year exemption
Tofes 106 (annual employer wage/tax summary) and bank/brokerage statements
Records of foreign income and assets (relevant for disclosure if resident from 1 Jan 2026)

Things most newcomers don’t know

The olim exemption covers foreign capital gains too, not just income — selling overseas shares, property or a business within your 10-year window can be Israeli-tax-free if the gain is foreign-source.

Most newcomers know about the income exemption but underuse the capital-gains side; timing a sale of foreign assets inside the window can save the 25-30% capital gains tax entirely.

Source: Israel Tax Authority — olim/returning resident benefits (Income Tax Ordinance ss.14 & 97)

From 1 Jan 2026 the reporting exemption is gone for new residents — the income is still tax-exempt, but you must now disclose foreign income and assets to the Tax Authority.

Pre-2026 olim enjoyed both no tax AND no reporting; arriving in 2026+ keeps the tax break but adds a disclosure duty, so plan record-keeping accordingly and don't assume 'invisible' equals exempt.

Source: Amendment to the Income Tax Ordinance (effective 1 Jan 2026)

Residency is decided by your 'center of life', not just day-counting — a remote worker can be deemed Israeli-resident even under 183 days if family and economic ties point to Tel Aviv.

Relying only on the day-count presumptions is a common trap; the substantive center-of-life test can pull you into worldwide taxation earlier than expected, so get a residency determination before your first year-end.

Source: Israel Tax Authority — residence rules (center-of-life test)

Common mistakes to avoid

Assuming the 10-year exemption covers Israeli-source income — local salary, local freelance work and Israeli assets are fully taxable from day one
Treating the post-2026 disclosure duty as optional — the tax exemption survives but failing to report foreign income/assets when required can trigger penalties
US citizens forgetting that the Israeli exemption does not remove US filing — you still owe US returns plus FBAR/FATCA even if Israel taxes nothing
Mis-picking osek patur vs osek murshe, or forgetting VAT rose to ~18% on 1 Jan 2025 — under-charging VAT or crossing the ~₪120,000 turnover line unregistered creates back-VAT liabilities
Overlooking Bituach Leumi and health-tax contributions, which apply on top of income tax and are easy to under-budget as a new self-employed person