Child tax credit on your payslip

 

The payslip you receive is an important document that each employer must provide to his or her employees. The payslip details the salary paid, no later than the 9th of each month.  In Israel, employees receive a pay-slip that includes a section detailing tax credit points. This section also appears in the annual tax statement of those who are self-employed.

This section has financial significance, but most of us don’t really understand its meaning.


Important information – what is a credit point?

The credit point enables the State of Israel to ease the tax burden and grant tax discount to those entitled to it according to the definitions.

Credit point is the amount deducted from the income tax payment that each employee must pay each year of work.

As of 2018, each credit point is worth 216 NIS per month.


What does it mean?
It means that an entitled employee will pay less income tax, as the amount that equals the number of credit points multiplied by the value of each credit point is deducted from the total income tax payment.

Credit points are given to residents of Israel;

A man, who is an Israeli resident, receive each month 2.25 credit points.

A woman, who is an Israeli resident, receive each month 2.75 credit points.


Employees, both men and women, recieve additional crediyt points if they have children:

 

Sabbatical Mother Father Single parent
0 *1.5 1.5 4
1 2.5 2.5 6
2 2.5 2.5 6
3 2.5 2.5 6
4 2.5 2.5 6
5 2.5 2.5 6
6-17 1 0 2
18 0.5 0 1.5

 

  • Women are entitled to choose between 0.5 credit points or 1.5 credit points. They can choose to receive one point from the 1.5 points during the tax year that the child was born or the following tax year. 

The credit points are annual and therefore the salary controller must be updated as soon as possible about the birth in order to update the salary accordingly. In other words, if a child is born in November, the employees will be entitled in the November payslip to receive credit points for the newborn from January (the child’s father will be entitled to 1.5 points * 11 months).

 

Children bring joy to our payslip 🙂

By: Dganit Danziger Ratzabi, Expert salary controller, Brooks – Keret.