Every guide to aliyah reaches for the same statistic, and it says Israel taxes the average worker more lightly than America does. That is true. It is also measured at each country's own average wage, and those are not the same number of dollars. Put your own salary through both systems and the answer moves.
Somewhere in Teaneck a family is opening a spreadsheet the winter before they move. One earner on 150,000 dollars, four children between six and seventeen, all four of them in day school. The tuition line disappears, which they already knew, and the salary line falls by an amount they have been arguing about since Sukkot. Nobody is worrying about the tax line, because everyone has told them Israel is fine on tax, and the source everyone is quoting is real.
If that is roughly your household, keep it in mind. It is the one we run through every chart below.
The OECD publishes a harmonised measure called the tax wedge, the share of total labour cost that never reaches the worker. In the 2026 edition, covering tax year 2025, Israel comes in at 26.1 percent and the United States at 30.0, against an OECD average of 35.1. Israel does tax the average worker more lightly, and we checked it.
What the figure does not say is that the two average workers are not earning the same money. The OECD puts the Israeli average wage at 209,735 shekels for 2025 and the American average at 73,520 dollars. At today's rate the Israeli figure is about 70,240 dollars, so the comparison everyone quotes sets an Israeli on roughly 70,000 dollars beside an American on roughly 73,500 and reports which of them keeps more. That is a fair question about two labour markets. It is not the question you are asking with a job offer in hand.
Yes, and the OECD's own tables show where it stops being true. Taxing Wages reports the wedge at three earnings levels for every member country: 67 percent of that country's average wage, 100 percent, and 167 percent. Israel sits below the United States at the first two levels and above it at the third.
The chart below plots those six published numbers against the dollar salary each one represents rather than against each country's own average. Every dot is a figure the OECD printed. Israel is the blue line and America the orange one. The horizontal axis is annual pay in dollars. The height of a dot is the tax wedge, so a dot higher up means a bigger share of the money never reaches the worker.
Watch where the two lines meet.
Two of these numbers get quoted. The third one crosses.
Tax wedge, single worker with no children, 2025, at 67, 100 and 167 percent of each country's average wage
Two things to hold against that number. The wedge counts what your employer pays as well as what you pay, and the American figure includes a representative state income tax, so it is wider than anything that shows up on a payslip. It also rests on three points per country, so the crossing between them is an interpolation. Treat it as a reason to build the comparison properly rather than as the answer.
We rebuilt both systems for tax year 2026 and put the same salary through each. On the American side that is the federal rate schedule, a standard deduction of 32,200 dollars for a couple filing jointly, the child tax credit at 2,200 dollars a child, and the employee half of Social Security and Medicare. On the Israeli side it is the 2026 brackets as widened in this year's budget, credit points worth 2,904 shekels each, and the national insurance and health tax your employer withholds at 4.27 percent on the first 7,703 shekels a month and 12.17 percent above that. Every threshold is in the method note at the bottom and in the spreadsheet published alongside this piece.
You do not stop filing in America when you land. If an Israeli company employs you, no American Social Security or Medicare comes out of your pay, because those apply to work done for an American employer. Federal income tax is a different matter. It follows you, and there are two ways to deal with it: credit the Israeli tax you have already paid against the American bill, or exclude the first 132,900 dollars of foreign earnings and pay American tax on whatever sits above that. The model runs both routes and charges the cheaper one. On most Israeli salaries the Israeli tax is the bigger of the two, the credit swallows the American bill whole, and nothing further is due. If you have children the choice does more than that, and the section after next is about what.
State income tax turned out to matter more than any other single choice on the American side, so the American line is drawn as a band. Its lower edge is federal tax alone, which is what a household in Florida or Texas pays. Its upper edge adds New Jersey, which is what a household in Teaneck, Passaic or Lakewood pays. The shaded space between the two edges is the state.
In the chart below the horizontal axis is annual gross salary in dollars and the height of a line is the share of that salary taken by income tax and the worker's own social contributions. Higher means less money in the bank. Blue is Israel, and the orange band is America. Follow the blue line from the left and watch where it enters the band and where it comes out of the top.
For a single earner with no children, the crossing sits between 48,000 and 86,000 dollars
Income tax plus employee social contributions as a share of gross salary, tax year 2026
We went in expecting the crossing somewhere near 185,000 dollars, on the reasonable ground that Israel's 47 percent bracket opens at 560,280 shekels, about 187,600 dollars today. That is where the top Israeli rate begins, and it is nowhere near where the two systems even out. Israel reaches its middle rates far earlier than an American expects. The 31 percent bracket opens at 228,000 shekels a year, about 76,400 dollars, and the 35 percent bracket at 301,200 shekels, about 100,900. Most of what happens to your payslip happens well before the top rate is in sight.
Now the Teaneck family. Run the same model for a married couple filing jointly with four children between six and seventeen, one earner, and the crossing moves up, for a reason that has nothing to do with Israel.
Read the chart below the same way: blue is Israel, the orange band runs from Florida at the bottom to New Jersey at the top, and the axis is the same annual salary in dollars. One thing is new. The heavy line across the lower part of the chart is zero, and a line below it means the household pays no tax at all and receives money instead. Look first at how far below zero the blue line starts.
For a family of six the crossing sits between 72,000 and 83,000 dollars
Income tax plus employee social contributions less child benefit, as a share of gross salary, tax year 2026
What holds the blue line down at the left of that chart is an American cheque, and whether it arrives depends on which route you take on your own return. Elect the foreign earned income exclusion and section 911 bars the refundable half of the child tax credit outright. Take the foreign tax credit instead and the refundable half survives: your Israeli tax is large enough to wipe out your American tax, so none of the 8,800 dollars of child credit gets spent against tax, and up to 1,700 dollars a child comes back as cash. Four children, 6,800 dollars a year, from the Internal Revenue Service to a family living in Modiin, for as long as the children qualify.
Take that cheque away and the crossing falls from 83,000 dollars to 35,000. Most of what keeps the Israeli line low at that end of the chart is American money.
Because almost everything America does for households with children has no Israeli counterpart, and the one Israeli counterpart that exists is small. America lets a married couple file as a single taxpayer and shelters 32,200 dollars before the first dollar is taxed, which at that family's marginal rate is worth about 7,084 dollars of tax on a 150,000 dollar salary. Israel taxes each earner separately, allows no deduction at all, and works instead through credit points worth 2,904 shekels apiece. A father of four children in that age range holds 6.25 of them, which comes to about 6,078 dollars.
Then there is the child benefit, and the two countries pay it through different plumbing. America gives a credit against tax, 2,200 dollars a child, 8,800 dollars for four. Israel pays cash every month through Bituach Leumi, the National Insurance Institute, 173 shekels for the first child and 219 for each of the next three, which is 9,960 shekels a year, about 3,336 dollars. We net both of them. Counting the American credit while ignoring the Israeli allowance would settle the argument by bookkeeping rather than by arithmetic.
One Israeli feature runs the other way, and it is worth naming because it surprises people. Israel attaches most of the child credit points to whichever parent receives the child allowance, which is usually the mother. A one-earner family where the father works holds 6.25 points; the same family where the mother works holds 10.75, a gap of 13,068 shekels a year, about 4,376 dollars. If only one of you will be earning in Israel, it matters which one. On an American joint return the question never comes up.
The chart below stops using percentages and shows dollars. Each pair of bars is one salary, New Jersey on the left and Israel on the right. Blue is income tax after child benefit has been netted off it, orange is payroll tax in America and national insurance and health tax in Israel, gold is New Jersey's own income tax and its payroll levies, and green is the American refund, which appears only on the Israeli bars. The line across the bottom is zero, and anything drawn below it is money the system pays out rather than takes in. Watch the blue block on the Israeli bar grow from almost nothing to the largest thing on the chart.
What the two systems take from the Teaneck family
One earner, four children aged six to seventeen, tax year 2026. Bars below the line are money the system pays out rather than takes in.
What this chart is not measuring
The Israeli health tax inside that orange block buys health insurance, and the American column contains no health insurance at all, because in America it is not a tax. KFF puts the average employer family premium at 26,993 dollars in 2025, of which 6,850 comes out of the worker's own pay, with an average single-coverage deductible of 1,886 on top and a family deductible larger again. Nor is tuition here: the first essay in this series found American day school medians between 20,000 and 31,000 dollars a child against an Israeli legal ceiling of 253 to 1,372 shekels. The tax line moves against the two largest lines in an Orthodox family's budget. It is one line among several, and it is the one that gets worse.
This year the Knesset enacted the Law for the Encouragement of Immigration to Israel and Return Thereto (Temporary Provision) 5786-2026. Anyone who becomes an Israeli tax resident for the first time between 5 November 2025 and 31 December 2026 pays no Israeli income tax on Israeli employment or business income, up to 600,000 shekels in 2026, a million shekels in each of 2027 and 2028, 350,000 in 2029 and 150,000 in 2030. Income from a related party is capped far lower, at 140,000 shekels a year, which matters if you will be paid by a company you own or by an American parent. National insurance and health tax still come out, and passive income is excluded, and there is a physical presence test in 2028 and 2029 with a retroactive clawback attached. The 2026 cap is pro-rated for a partial year of residency, so someone landing this summer gets part of it. Inside those limits, if you become an Israeli tax resident for the first time before the end of this year, the Israeli side of this entire essay is suspended for you for five years.
A French or an Australian immigrant can stop reading here. An American cannot, because the United States taxes its citizens wherever they live, and the thing that normally protects an American in Israel is a credit for the Israeli tax they paid. Waive the Israeli tax and there is nothing left to credit. All that remains is the foreign earned income exclusion, which covers 132,900 dollars in 2026 and stops.
The chart below takes a single new immigrant in 2027 or 2028, when the cap is a million shekels, and asks who ends up with the money Israel gave away. The horizontal axis is that immigrant's salary. The full height of a column is the Israeli income tax the law waived, in dollars. The blue part is what the immigrant keeps, the orange part on top is what the United States Treasury collects instead, and the figure above each column is the orange share. Watch the orange appear and then take over.
Israel waives the tax. Above about 149,000 dollars, America starts collecting it.
Israeli income tax forgone under the 2026 temporary provision, single new immigrant, split by who ends up with it
The share rises with income because the exclusion is a fixed dollar amount and the salary is not. An American oleh in Tel Aviv can add the housing exclusion, worth up to 29,536 dollars in 2026 on the IRS high cost table, which trims the recapture without changing its shape. So would the answer to a question nobody has litigated: if Israeli national insurance and health tax were held creditable against American tax, the share Washington recaptures at the cap would fall from about 47 percent to about 35. No published source we could find runs this arithmetic. The upshot is that the incentive is worth its full face value to every eligible immigrant except the Americans, and it is worth least to the American high earners it was written to attract.
Nobody knows. There is no study of the earnings of Anglo or American olim in Israel. The Ministry of Aliyah and Integration publishes a record level file of every immigrant registered since 2015, 384,688 rows carrying age, origin, absorbing town and profession, with 36,459 American records in it, and as far as we can establish nobody has ever cross tabulated profession by country of origin from it. The nearest published facts are that about 3,781 Americans made aliyah in 2025, that 541 of the year's immigrants across all origins were physicians and more than 2,000 worked in technology or engineering.
What can be shown is the distribution they are landing into. The Finance Ministry's chief economist supplied the Knesset research service with the share of Israeli wage earners in each tax bracket for 2024, and it is the cleanest picture of the Israeli wage structure in public.
Each bar below is one band of monthly pay, and its height is the share of all Israeli wage earners inside that band. The bands are the income tax brackets themselves, which is why they get wider in shekels and shorter in people as they go right. The shaded strip laid over the middle of the chart is where every crossing point in this essay falls. Find the strip first, then look at how much of the workforce stands to the left of it.
Where the crossing points fall in the Israeli wage distribution
Share of all Israeli wage earners by monthly gross pay, 2024, Ministry of Finance chief economist
Two things follow from where that strip sits. The first is that a professional oleh does not arrive at the salary they left. Eckstein and Weiss, working on the Soviet wave, found that immigrants earned no return at all on schooling and experience acquired abroad in their first years, then that the highly skilled among them grew wages about 8 percent a year for a decade without ever fully converging on comparable natives. So a doctor or a lawyer who sat well above the crossing point in New Jersey may spend their first Israeli years below it, climbing back towards it.
The second is the timing, and it is why the crossing points above are drawn for a settled resident rather than for a new arrival. A new immigrant holds extra credit points for 54 months, on a schedule that rises for two years and then tapers, and while they last the single earner's crossing moves from 48,000 and 86,000 dollars up to about 79,000 and 118,000. Then the points stop. The five year exemption for 2026 arrivals tapers in 2029 and ends after 2030. Those reliefs run out on dates fixed in advance, and your salary is still climbing when they do.
If you are moving with a business rather than a job, the arithmetic is worse. There is no social security totalisation agreement between the United States and Israel, so an American running an osek murshe, a registered self-employed business, pays Israeli national insurance and health tax at 18 percent and American self-employment tax at 15.3 percent on the same income. In February the Knesset exempted American olim from Israeli national insurance for five years where they pay United States social security, which removes the national insurance half and leaves the health tax. Rates below are total tax as a share of gross. Neither column is a full return: the Israeli side leaves out the deduction a self-employed person takes for part of the national insurance they pay, and the American side leaves out the qualified business income deduction and the deduction for half of self-employment tax. Treat the table as the shape of the problem, not as a return.
| Gross | Israel | Israel, with the new exemption | United States, federal | United States, plus New Jersey |
|---|---|---|---|---|
| $60,000 | 37.2% | 28.7% | 22.5% | 26.2% |
| $80,000 | 41.5% | 31.9% | 25.1% | 29.4% |
| $100,000 | 45.8% | 35.6% | 27.3% | 32.1% |
| $150,000 | 52.9% | 41.8% | 30.6% | 36.1% |
| $200,000 | 57.2% | 45.6% | 32.5% | 38.2% |
So: at what salary does moving to Israel start costing you in tax?
Between about 48,000 and 86,000 dollars if you are single with no children, and between about 72,000 and 83,000 if you are married with four, with the range in each case turning on whether you are leaving Florida or New Jersey. The statistic everyone quotes, that Israel taxes the average worker more lightly than America does, is accurate, and it is measured at two different salaries. Hold your own salary still and Israel's advantage runs out somewhere near the Israeli average wage, a long way below the 185,000 dollars that the opening of the 47 percent bracket suggests.
The family sits higher on that scale than the single earner only because America keeps paying. Take away the refundable child credit that crosses the ocean with them and the crossing point drops by 48,000 dollars. That is American policy doing the work, and it is worth knowing whose rules you are leaning on.
Two larger lines in the same budget run the other way, because tuition disappears and health insurance is already inside the tax. The practical lesson is narrow: price the tax line as a cost rather than a saving, and keep it beside the two lines that move in your favour. The statistic about the average worker is a true answer to a different question.
Method and caveats
Every figure is tax year 2026 and every conversion uses 2.986 shekels to the dollar, the Bank of Israel representative rate for 25 August 2026. Israeli brackets are the 2026 schedule as widened by this year's budget, retroactive to January: 10 percent to 84,120 shekels, 14 to 120,720, 20 to 228,000, 31 to 301,200, 35 to 560,280, 47 to 721,560 and 50 above, with the credit point at 2,904 shekels. Employee national insurance and health tax are 4.27 percent to 92,436 shekels a year and 12.17 percent to the ceiling of 622,920, both confirmed against the Bituach Leumi rate tables in force from 1 January 2026. Social Security and Medicare are charged only in the American column, since employment by an Israeli employer falls outside them. American figures follow Revenue Procedure 2025-32: brackets as published, standard deduction 16,100 single and 32,200 joint, child tax credit 2,200 a child with 1,700 refundable, Social Security wage base 184,500, and the additional Medicare tax above 200,000 and 250,000. New Jersey uses the 2026 rate schedules from Form NJ-1040-ES, exemptions of 1,000 per adult and 1,500 per child, and employee unemployment, workforce, disability and family leave contributions at the 2026 rates and wage bases.
Modelling choices worth arguing with. The measure throughout is the employee side, meaning income tax plus the worker's own social contributions, so employer contributions are excluded on both sides even though the OECD wedge in the opening chart includes them. Pension contributions are excluded because they remain the worker's property, following the OECD, which also leaves out the 35 percent Israeli credit on an employee's own pension contribution under section 45A. That credit is worth up to about 2,850 shekels a year, so omitting it costs Israel roughly a point of effective rate near the crossing, and omitting an American 401(k) deferral costs America a comparable amount. Both are stated here rather than modelled. The single household is a male resident with 2.25 credit points; the family is a one-earner married couple with four children aged six to seventeen, giving the father 2.25 base points and one point per child. Child benefit is netted on both sides. The American return that follows an oleh is computed both ways and the cheaper result is used. On the foreign tax credit route the credit is limited to the American tax before credits, the non-refundable child credit is applied to what remains, and the refundable additional child credit is preserved, which is why an Israeli-resident family can end the year with a refund from the Internal Revenue Service. On the section 911 route the exclusion is stacked under the rule in section 911(f), the refundable child credit is barred, and the credit for foreign tax is available only on the unexcluded slice. The housing exclusion is left out of the base case and noted where it matters, as is the child credit phase-out, which begins above 400,000 dollars and outside the range charted here. Israeli national insurance and health tax are treated as not creditable against United States tax. Many practitioners follow that treatment and some do not, and no court, ruling or revenue procedure has settled it. If the contributions were held creditable, the share the United States recaptures under the new immigrant exemption would fall from about 47 percent to about 35, while the base cases would not move, because the American residual is already zero in them. State income tax is shown only for New Jersey and for states with none, so a family in Maryland or New York sits inside the band rather than at either edge. Nothing here models capital income, the two point surtax that applies to it above 721,560 shekels, the keren hishtalmut, a study fund, which is tax free in Israel after six years and fully taxable in America, or the ten year exemption on foreign source income that new immigrants receive.
The Israeli wage distribution comes from the Ministry of Finance chief economist by way of a February 2026 Knesset research paper and covers 2024. Its implied median, about 8,500 shekels a month, is below the 10,586 shekel median in the Bituach Leumi national salary report for the first half of 2025, because the two count part-year and part-time workers differently. Shares above a threshold are interpolated linearly inside a band, which slightly overstates them in a right-skewed distribution. No claim here rests on the share of American olim above any threshold, because that number does not exist: the record level arrivals file carries profession and has never been cross tabulated by origin. Its row counts were read from the published dataset description rather than from the files themselves.
Sources. OECD, Taxing Wages 2026, Israel and United States country chapters and Table 3.1. Israel Tax Authority monthly deductions booklet for January 2026, updated April 2026. Bituach Leumi contribution rate tables and child allowance schedule, current from 1 January 2026. Internal Revenue Service, IR-2025-103 and Revenue Procedure 2025-32, and Notice 2026-25 for housing amounts. New Jersey Division of Taxation, 2026 rate schedules and NJ-1040 instructions; New Jersey Department of Labor 2026 contribution rates. Knesset Research and Information Centre, analysis of the 2026 income tax bracket widening, February 2026. Law for the Encouragement of Immigration to Israel and Return Thereto (Temporary Provision) 5786-2026, as summarised by Grant Thornton Israel and corroborated independently. National Insurance Law amendment on national insurance for American olim, February 2026. KFF Employer Health Benefits Survey 2025. Eckstein and Weiss, On the Wage Growth of Immigrants: Israel 1990 to 2000, Journal of the European Economic Association, 2004.
חשבון · Ḥeshbon, Center on Data and Jewish Life
A data project on how Jewish life is paid for. The work comes in seasons. This page is part of the Aliyah Series, on what it actually costs to move a family to Israel. It states its own sources, its own model and its own limits, and the model behind this page is published alongside it as a spreadsheet so the arithmetic can be checked line by line.
Ḥeshbon
A data project on how Jewish life is paid for, published in full. Every figure comes from the underlying research, and where a chart simplifies a published result the piece says so.
Each piece here is published, with its own sources, sample sizes and limits stated in place. Percentages describe the samples observed, and several rest on small denominators, noted where they appear. Nothing here audits an individual institution. Aliyah figures are current as of August 2026, at roughly three shekels to the dollar, and Israeli tax and benefit rules move faster than that.