Tax credit points and benefits: how to pay less
Tax credit points and benefits can directly reduce the income tax you pay and increase the salary deposited into your account. On this page, we will understand how tax credit points work, who may qualify for additional benefits, and what you should update on Forms 101 and 106 to prevent unnecessary tax payments and check whether you are entitled to a refund.
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Income tax may seem unavoidable, but the state grants "tax credit points" that directly reduce the amount of tax you need to pay. Understanding these points and completing the relevant forms correctly can be worth thousands of shekels to you each year.
What are tax credit points, and what are they worth?
Tax credit points are "coupons" that reduce the amount of tax calculated on your gross income.
- Financial value: Each credit point has a fixed annual value that is updated every year. As of 2026, one point is worth NIS 242 NIS (242 NIS ש"ח) per month, or approximately NIS 2,904 NIS (2,904 NIS ש"ח) per year.
- How does it work? If your calculated tax is NIS 1,000 and you have 2.25 tax credit points — the basic amount for every Israeli resident — you will actually pay less than NIS 500 in tax.
How the calculation works
242 multiplied by 2.25 = NIS 544.5
NIS 1,000 minus NIS 544.5 in tax credit points = a remaining tax balance of NIS 455.5.
Who is entitled to benefits?
Every male Israeli resident automatically receives 2.25 tax credit points, while every female Israeli resident receives 2.75. Additional points may be accumulated based on personal circumstances:
Eligibility for additional tax credit points
| Reason for eligibility | Who is eligible? |
|---|---|
| Parenthood | Parents of children, with more points for young children. |
| Military or national service | Discharged soldiers and people who completed national service, for 3 years after completing their service. |
| Higher education | Graduates of an academic degree or professional qualification. |
| Family status | Single-parent families or people paying child support. |
| Place of residence | Residents of certain communities, including frontier or peripheral communities. |
Tofes 101 (טופס 101): how you update the state
Tofes 101, also known as the "employee card," is the form you complete at the beginning of each year or when you start a new job. It is the channel through which your employer knows how many tax credit points to grant you.
When must you update the form?
When should you update Tofes 101?
- When a child is born.
- When you complete an academic degree.
- When you move to a qualifying community.
- When your family status changes, such as marriage or divorce.
Tofes 106 (טופס 106): the annual summary and route to a tax refund
Tofes 106 summarizes all the information from your payslips throughout the tax year, from January through December. Your employer must provide it to you by the end of March of the following year.
What do you do with Tofes 106?
- Check for mistakes: Make sure the total salary and tax paid match what you received.
- Tax refund: If you worked for only part of the year, or changed jobs without coordinating your tax, this form is the basis for requesting a refund from the Israel Tax Authority.
- Tax coordination: Use the information to coordinate tax for the following year if you have more than one employer.
- Receive a tax credit for donations under Section 46.
If you worked in several places, you will receive a separate Tofes 106 from each one.
Frequently asked questions
I forgot to report the birth of my child on Tofes 101. Is the money lost?
Not at all. You can ask your employer to make a retroactive correction during the tax year, or submit a tax-refund request at the end of the year using Tofes 106.
Can unused tax credit points become part of my net pay if I do not reach the tax threshold?
No. Tax credit points can reduce your tax to zero, but they cannot create "negative tax." In other words, the state will not pay you money if you did not reach the tax threshold in the first place.
In summary
Managing your tax credit points and Forms 101 and 106 correctly is the most direct way to increase your net salary without increasing your gross salary. Make sure your employer knows every relevant detail about you — every child, every degree, and every status change can be worth money in your bank account.