israeli-budget-planner

Israeli Budget Planner

Legal notice

This is a free information tool operated by an artificial-intelligence model. It computes taxes, National Insurance and health-tax deductions, mortgage repayments and budget figures from the data you enter, alongside a general explanation of the applicable rules. All of its output is produced automatically, without the involvement, review or approval of an accountant, tax adviser, pension adviser, investment adviser or banker. The output is not tax advice and not a filed return, not pension advice and not pension marketing, and not investment advice, investment marketing, or a recommendation to buy, sell or hold any security or financial asset. It is a raw budgeting indication only.

Any maximum mortgage figure the tool presents is a planning exercise for orientation, not an approval, a promise, or an offer of finance. It does not include the bank's underwriting, does not examine your credit history, does not price the actual tracks, and does not account for your household's full expenses and debts. It does not take into account your financial position, your investment objectives, or the risk you are able to bear. An AI model may err, omit data, or present a wrong conclusion, and rates and thresholds change from time to time.

Responsibility for reporting and paying tax is yours, the binding computation is the Tax Authority's, and representation before the Tax Authority is reserved by law to those entitled to it. Do not rely on the output to transfer funds, change an investment track, withdraw severance, or make any other pension decision. This tool is not a substitute for advice that takes into account the particular circumstances and needs of each person, and before signing a loan, a document with a bank, or a document with an authority, consult the bank and the appropriate licensed professional. All use of the output is at the user's sole responsibility.

Key Financial Rates

Rate	Value (Reference)
BOI Interest Rate	3.25%, lowered at the 1 Sep 2026 decision and in effect from 3 Sep 2026. It can change at every scheduled BOI decision, so re-verify at boi.org.il before quoting
Prime Rate	BOI + 1.50% = ~4.75%
VAT (Ma'am)	18%
Minimum Wage	6,443.85 NIS/month (35.40 NIS/hr), from 1 Apr 2026
Average Wage	13,566 NIS/month under section 1 and 13,769 NIS/month under section 2 of the National Insurance Law (from 1 Jan 2026). Bituach Leumi publishes both figures for both benefits and contributions, so check which section the rule you are applying cites

Mashkanta (Mortgage) Tracks

Track	Rate Type	Indicative range
Prime-linked	Variable	Prime +/- 0.5%
Fixed unlinked	Fixed	4.5%-6.5%
CPI-linked fixed	Fixed + CPI	3.0%-5.0% + CPI
CPI-linked variable	Resets every 5 yrs	2.5%-4.5% + CPI

The ranges above are indicative market levels for orientation, not published or regulated figures; price the actual tracks with the bank.

BOI rules (Proper Conduct of Banking Business directives on housing loans): Max LTV 75% first (only) home, 70% replacement apartment (dira chalifit), 50% investment. Mix rule: at least 1/3 of the total loan must be in a FIXED-interest track; up to 2/3 may be variable. The fixed third does NOT have to be unlinked, a CPI-linked fixed track satisfies it too, which is often the cheaper way to meet the rule. Maximum term: 30 years on any track.

PTI under the same directive: the monthly repayment may not exceed 50% of disposable income, and the repayment counted includes earlier loans secured on the same property (from any lender) with more than 18 months left to run. Above 40% PTI the bank must assign the loan a 100% risk weight, so expect stricter pricing or underwriting between 40% and 50%; 40% is this skill's planning line, not a legal limit.

Arnona (Municipal Property Tax)

Arnona is set by each municipality and updated annually, so per-city numbers go stale fast. Do not rely on a static table. Fetch the city's current-year arnona order (tzav arnona, 2026) from the municipality's website (or via the israeli-cbs MCP for indices). Rates are quoted per square meter and vary by zone and property classification.

Illustrative only: a mid-size Tel Aviv residential property may run roughly 500-1,500 NIS/month depending on size and zone (2026, verify with the municipality).

Payroll Deductions: Bituach Leumi + Health-Tax (Employee)

Both are withheld together. Two thresholds apply to everyone: the reduced-collection step at 7,703 NIS/month (from 1 Jan 2026) and the maximum insurable income of 51,910 NIS/month (from 1 Jan 2026). Salary above the ceiling is not charged at all, so a high earner budgeting by hand must cap these deductions there.

The employee rate is NOT one number. It varies by age and pension status, and the default row applies only to a resident aged 18 to retirement age. Budgeting a working pensioner or a working teenager at the default rates overstates their deductions by the entire amount. Combined employee rates (Bituach Leumi + health-tax), per the Bituach Leumi rate table:

Employee category	Reduced band (to 7,703)	Full band (7,703 to 51,910)
Resident aged 18 to retirement age (default)	4.27% (1.04% BL + 3.23% health)	12.17% (7% BL + 5.17% health)
Under 18	0%	0%
Receiving old-age pension (kitzvat ezrach vatik)	0%	0%
Receiving disability pension, with annual BL approval	3.23% (health only, BL 0%)	5.17% (health only, BL 0%)
Aged 67 to 70, not receiving old-age pension	3.93%	10.03%
Woman between retirement age and the male retirement age, not receiving a pension	3.95%	10.24%
Controlling shareholder in a close company (baal shlita)	4.25%	11.96%
First became resident after age 62, below retirement age	3.6%	7.45%

The percentages themselves did not change for 2026 (they carry 2025 effective dates); only the two thresholds did. Employer contributions are separate and are not deducted from the employee.

Also budget kupat cholim supplemental insurance (bituach mashlim, e.g. Maccabi Zahav / Clalit Mushlam): an optional monthly line on top of the basic health basket (sal briut) that these taxes already fund.

scripts/budget_calculator.py --category applies the correct row; it defaults to the resident-18-to-retirement row.

What the net-pay estimate does NOT include

The calculator models a salaried employee with ONE employer. It is not a payslip. Before using its net figure for affordability, correct for:

• Credit points for children. For a family this is usually the largest single correction, and omitting it overstates tax by hundreds of shekels a month. Ask each child's year of birth, add the points from the table below to each parent's 2.25 base (plus 0.5 for a woman), and pass the real total via --credit-points.
• The tax credit on the employee's own pension contribution. The calculator taxes gross and then subtracts pension as cash, so its income-tax line is conservative (too high).
• Keren hishtalmut, if the employee has one: the employee's share is deducted from take-home before the money is saved, so do not budget it twice.
• A second employer. With two jobs the reduced band and the credit points cannot both be claimed twice: the secondary employer withholds at the full band and the top tax rate until a tiaum (both tiaum dmei bituach and tiaum mas) is filed. Running each job separately through the tool overstates combined net pay and can produce a year-end tax bill.
• Taxable benefits added to salary, such as a company car (shovi shimush), which raise taxable income above gross.
• Bonus months and part years. The tool annualises one month. Pass a typical month (annual gross divided by 12), not a 13th-salary or bonus month, and expect a lower annual tax for someone who worked only part of the year.
• The pension line. Mandatory pension starts at age 21 for men and 20 for women, and a new hire without an existing fund waits 6 months. --category under18 therefore deducts no pension; for anyone else with no pension deduction (aged 18 to 20, in the waiting period, or past retirement age, where different rules apply) pass --pension-rate 0.
• The self-employed are out of scope. An osek patur or osek murshe pays different Bituach Leumi and health rates, has deductible expenses and mikdamot, and must not be run through --salary. Route them to a self-employed skill.

Child credit points (parents living together, 2026)

Per child, by the child's age during the tax year. "Mother" is the woman in a couple of a man and a woman living together; in a same-sex couple it is the parent receiving the child allowance. The mother may defer one birth-year point to the following year (1.5 then 5.5), useful when she has little taxable income in the birth year. Each point is worth 242 NIS/month.

Child's age in the tax year	Mother	Father
Year of birth	2.5	2.5
Year the child turns 1, and turns 2	4.5 each year	4.5 each year
Year the child turns 3	3.5	3.5
Years the child turns 4 and 5	2.5 each year	2.5 each year
Years the child turns 6 to 17	2	1
Year the child turns 18	0.5	0

Sanity check (Kol Zchut's own example): two children who turn 2 and 8 in 2026 give the mother 9.25 points (4.5 + 2 + 2.25 + 0.5) and the father 7.75 (4.5 + 1 + 2.25). Credit points cut a parent's tax down to zero at most and the unused value is not paid out, so points held by a low-earning parent can be partly wasted. Separated, divorced and single parents follow different allocation rules (for example an extra point for a separated parent raising the children), so check Kol Zchut before computing for them.

Surtax (Mas Yesef)

The top of the bracket table hides a surtax, and it is easy to miss because it is not an ordinary bracket:

• The 50% top row above 721,560 NIS/year (60,130 NIS/month) is the 47% bracket plus a 3% surtax. The brackets in section 121 of the Income Tax Ordinance stop at 47% and the 3% comes from section 121B, so a budget built from the section 121 brackets alone understates the marginal rate for a high earner.
• Since 2025 a further 2% applies to high income that is NOT from employment or a business, taking the top rate on that income to 52%. A household with significant investment or rental income should budget for this separately from salary.

Monthly Budget Template (Couple + 1 Child)

These are this skill's own planning heuristics for orientation, not published CBS survey figures. For real distributions use the CBS household expenditure survey.

• Housing: 4,000-8,000 (25-35%)
• Food: 2,500-4,500 (15-25%)
• Education: 1,500-3,500 (8-15%)
• Transportation: 500-1,500 (3-8%)
• Arnona: 400-800 (3-5%)

Household Benefits (Income Side)

A budget must count recurring inflows, not just expenses:

• Child allowance (kitzvat yeladim): from 1 Jan 2026 Bituach Leumi pays 173 NIS/month for the first child, 219 NIS for each of the second, third and fourth, and 173 NIS for the fifth child onward. A parent receiving a subsistence benefit (income support, mezonot, or an old-age or survivors' pension with income supplement) gets a further 113 NIS for the third and fourth child. It lands automatically in the parent's account; add it to household income, but ask the bank whether it counts the allowance as income before including it in PTI.
• Savings for every child (chisachon lekol yeled): Bituach Leumi also deposits 58 NIS/month into each child's savings plan. A parent may add another 58 NIS from the allowance, doubling the saving to 116 NIS, which cuts the cash allowance by 58 NIS per child.
• Subsidized daycare (ma'on / mishpachton): working parents may qualify for a means-tested ma'on subsidy that sharply cuts the childcare line, one of the largest young-family costs. Check eligibility and the subsidy tier via the Economy Ministry's ma'onot-yom system before budgeting full-price daycare.
• Work grant (ma'anak avoda / negative income tax): lower-income working households (employees and self-employed) may be entitled to an annual work grant paid by the Tax Authority. Check eligibility at the tax authority; it is a recurring income-side inflow like the two above.

Savings Vehicles

• Keren Pensia: contributions attract tax relief and the money is locked until retirement age
• Keren Hishtalmut: the main Israeli medium-term vehicle; withdrawals become available after six years, with tax advantages subject to statutory ceilings
• Kupat Gemel: comes in distinct forms with different rules, including a kupat gemel le'kitzba locked to retirement age and a kupat gemel le'hashkaa that is withdrawable at any time. Confirm which form is on offer and its exact tax treatment with the provider or the tax authority before budgeting around it
• Emergency fund: hold 3-6 months of essential expenses in an accessible account before locking money into any of the above. The locked vehicles are tax-efficient precisely because you cannot reach them in a bad month.

Examples

Example 1: Create a Monthly Household Budget

User says: "Help me plan a monthly budget for a family in Tel Aviv" Actions:

1. Input gross salary, calculate net after tax (brackets: 10%-50%)
2. Deduct Bituach Leumi + health-tax at the row matching the person's age and pension status (default resident 18-to-retirement: 4.27% combined to 7,703, 12.17% above, capped at 51,910). Ask before assuming the default row. Then pension: the employee's statutory share is 6%, or 0 where none is deducted (see "The pension line" above) (the 6.5% figure often quoted is the EMPLOYER's tagmulim leg, not a deduction from the employee)
3. Budget categories: rent/mortgage (30-40%), groceries (15%), transport (10%), utilities (8%), childcare
4. Include arnona estimate for Tel Aviv (fetch the municipality's current-year rate)
5. Savings target: keren hishtalmut + pension + emergency fund Result: Complete monthly budget with Israeli-specific deductions and savings plan

Example 2: Evaluate a Mashkanta (Mortgage) Option

User says: "Should I take a fixed or variable rate mortgage in Israel?" Actions:

1. Compare mortgage tracks: Prime-linked, fixed (kvua), CPI-linked (tzamud madad)
2. Calculate a blended-track payment. A single prime-only run (e.g. the script default 4.75%) is illustrative and understates reality: at least 1/3 must sit in a fixed track, so compute 1/3 fixed plus 2/3 prime and sum, or label the single-rate result "prime-only, blended will be higher". The fixed third may be unlinked (4.5-6.5%) or CPI-linked fixed (3.0-5.0% plus CPI); price both, the linked option is usually cheaper on the headline rate but carries index risk
3. Apply Bank of Israel's PTI cap: a mortgage may not be taken where the monthly repayment exceeds 50% of disposable income. Kol Zchut's guide also counts mortgage insurance and associated costs in the repayment; including them is the conservative reading. That is the regulatory ceiling, not a target. Individual banks apply their own stricter underwriting below it, so ask the bank what ratio it will actually approve rather than planning to the legal maximum
4. Budget mortgage life insurance and structural insurance (bituach chaim / bituach mavne) as a recurring required cost, not a one-off: the bank may require both as a condition of the loan. The premium is individually underwritten, so get a quote rather than assuming a figure; early repayment, refinancing, or a change in personal or medical status can lower it later
5. Compare total cost over 15/20/25 year terms (30 years is the regulatory maximum) Result: Mortgage comparison with monthly payments, the insurance line, and total cost per track

Example 3: Work Out What Mortgage a Household Can Actually Afford

User says: "We earn 22,000 gross between us, how big a mortgage can we take?" Actions:

1. Ask first: each earner's gross salary and age, the children's years of birth, how much equity the household has, whether this will be its only apartment, whether it is a reduced-price purchase (mechir lamishtaken, dira behanacha), and any existing loans, alimony (mezonot) or rent. Without the equity figure the answer is only half an answer
2. Convert gross to net for each earner separately, using the Bituach Leumi row that matches each person's age and pension status, plus income tax after credit points (2.25 base, women 2.75, plus the child points from the table above) and the 6% employee pension share (0 where none is deducted). Two earners at 11,000 each net far more than one earner at 22,000, because the brackets and the reduced band apply per person
3. Subtract fixed expenses to get disposable income: under directive 329 these are obligations with more than 18 months left (loan repayments not already in the housing repayment, and alimony), plus current rent if the household will not live in the purchased apartment
4. Apply the PTI cap: the monthly repayment, counting any earlier loans secured on the same property, must stay under 50% of disposable income. Plan to about 40% or below: above 40% the bank must hold more capital against the loan, and its own underwriting is stricter still
5. Convert the affordable monthly payment into a loan size with --max-loan --payment P --rate R --years N, at a blended rate rather than prime alone (a principal-weighted average of the track rates is a close approximation; confirm by running --mortgage per track and summing)
6. Stress-test: up to 2/3 of the loan can float with prime, so re-price the prime share at prime plus 2 points, report the stressed repayment as a share of disposable income, and flag it if it exceeds 50%. If the fixed third is CPI-linked, its payment also rises with CPI, which this test does not capture
7. Check the result against the LTV cap: a 75% first-home LTV means the household still needs 25% in equity, and that equity requirement, not PTI, is the binding constraint for most first-time buyers. Reduced-price programs differ: the buyer must pay at least 100,000 NIS from own funds (60,000 NIS where a mechir lamishtaken grant applies), and the bank may measure the 75% LTV against an appraisal of the apartment (if the appraisal exceeds 2.1M NIS, against the higher of 2.1M NIS and the price) rather than against the price. The equity needed is therefore the larger of that minimum and the price minus 75% of the recognised value, so ask the bank for the appraisal before assuming the minimum is enough. The 25% is not the whole cash requirement: purchase tax (mas rechisha), lawyer, broker, appraiser, registration and moving all fall outside the loan and are paid in cash at closing. Price them for the specific property before treating 25% as the target, or the household arrives at closing short. Purchase tax on a buyer's only apartment is 0% up to 1,978,745 NIS, 3.5% from there to 2,347,040 NIS and 5% up to 6,055,070 NIS (2026 brackets, frozen until 15 Jan 2028); a buyer who already owns an apartment pays 8% from the first shekel, unless buying a replacement apartment and selling the old one in time (a second-hand purchase: within 24 months of buying; from a contractor: within 12 months of the contractual delivery date), in which case the single-apartment brackets apply. Confirm with the Tax Authority's purchase-tax simulator before signing
8. Add the recurring costs the payment excludes: mortgage life and structural insurance, arnona, va'ad bayit Result: A maximum loan figure with the binding constraint named, plus the true monthly housing cost rather than the bare repayment

Bundled Resources

Scripts

• scripts/budget_calculator.py -- Calculates Israeli household budget including income tax, Bituach Leumi, health tax, pension deductions, mashkanta payments (--mortgage), and the largest loan a monthly payment supports (--max-loan --payment). Run: python scripts/budget_calculator.py --help

References

• references/domain-checklist.md -- The coverage contract this skill is audited against: what it must cover, what it should cover, and what is explicitly out of scope. Read it when deciding whether a question is in scope.
• references/israeli-financial-rates.md -- Current BOI interest rates, mortgage guidelines, arnona guidance, cost of living benchmarks, and savings vehicle comparisons. Consult when calculating specific financial figures or comparing options.

Recommended MCP Servers

For live financial data, pair this skill with:

MCP Server	What it provides	Install
boi-exchange	Live Bank of Israel exchange rates and interest rate data	Install
israeli-cbs	Consumer Price Index (CPI), housing indices, and economic statistics from the Central Bureau of Statistics	Install
israel-statistics	Additional CBS price indices and inflation-adjusted price calculations	Install
il-budget	Israeli government budget data, procurement contracts, and support payment information	Install
budgetkey	Comprehensive Israeli State Budget data (1997-2025) with full SQL query support	Install

When these MCPs are available, use them for real-time rates and indices instead of the static reference tables above.

Reference Links

Source	What it covers	URL
Bank of Israel	Interest rate, prime, monetary policy	https://www.boi.org.il
Central Bureau of Statistics	CPI, housing indices, average wage	https://www.cbs.gov.il
Kol Zchut	Mortgage rules, minimum wage, credit points	https://www.kolzchut.org.il
Israel Tax Authority	Income tax brackets, VAT, credit points	https://www.gov.il/taxes

Gotchas

• Agents often use US mortgage conventions (30-year fixed rate) for Israeli mortgages. Israeli mashkantaot use a mix of tracks (maslulim): Prime-linked, CPI-linked fixed, CPI-linked variable, and fixed-rate unlinked, with typical terms of 15-30 years.
• Bituach Leumi (National Insurance) deductions are mandatory for all Israeli workers and reduce take-home pay significantly. Agents may omit these from budget calculations, using gross salary as available income.
• Israeli rent is commonly quoted as monthly amounts excluding arnona and va'ad bayit (building maintenance). Agents may compare rents without accounting for these additional fixed costs that can add 500-2,000 NIS/month.
• Agents apply the headline 4.27%/12.17% Bituach Leumi and health-tax rates to everyone. They are the rates for a resident aged 18 to retirement age only. A working pensioner and an under-18 employee pay ZERO employee contributions, and a disability-pension recipient pays health-tax only. Ask for age and pension status before computing net pay.
• Agents treat 6.5% as an employee pension rate. The employee's statutory share is 6%; 6.5% is the employer's tagmulim contribution, and a further 6% employer severance leg brings the total to 18.5%. Deducting 6.5% from the employee understates net pay.
• The Hishtalmut fund (keren hishtalmut) is a unique Israeli savings vehicle with tax benefits. Agents unfamiliar with Israeli financial products may suggest generic savings accounts instead.

Troubleshooting

Error: "Tax calculation doesn't match pay slip"

Cause: Tax credits (nekudot zikui) not properly applied Solution: Every Israeli resident gets 2.25 base credit points. Women get 0.5 additional (2.75 total). New immigrants get extra credit points for 42 months (arrived before 2022) or 54 months (arrived in 2022 or later), on a monthly schedule that differs between the two groups. Each point is worth 242 NIS/month (2026; verify the current value with the tax authority). Apply credits before calculating tax, and for parents add the child points from the table under "What the net-pay estimate does NOT include". If the gap remains and the salary is high, check whether surtax (mas yesef) is in play: the pay slip may show 50% marginal rather than the 47% top bracket.

Error: "Net pay is far higher on the pay slip than the calculator says"

Cause: the calculator used the default Bituach Leumi row for someone who is not in it (most often a working pensioner, an employee under 18, or a disability-pension recipient). Solution: Re-run against the correct category row. A pensioner and an under-18 employee pay 0% employee Bituach Leumi AND 0% health-tax; a disability-pension recipient with annual approval pays health-tax only. If the gap equals the difference between the default-row and the correct-row deductions (re-run both and compare), it points at the category row, not at credits.

Error: "Arnona amount seems wrong"

Cause: Arnona varies significantly by city, zone, and property classification Solution: Arnona is municipality-set and updated annually. Do not use a static table. Fetch the relevant municipality's current-year tzav arnona (2026) for the exact per-square-meter rate by zone and property class.