Tax refunds for employees in Israel: who is eligible, how far back, and how to file (2026)

Who is eligible? Mostly people whose employer did not see the full picture

Israeli income tax is withheld by the employer month by month, assuming the salary is your only income and that nothing changed during the year. Real life is messier. Whenever the yearly picture differs from the monthly assumption, tax is usually overpaid, and the only way to get it back is to ask. The most common grounds I see:

• You worked only part of the year: started mid-year, were laid off, took unpaid leave, received unemployment benefit or maternity pay. Monthly withholding assumed twelve salaries.
• Two employers in the same year without a tax coordination (teum mas): the second employer withholds at the maximum rate.
• Credit points you never claimed: children under 18, a change in family status, single parenthood, or a completed academic degree (form 119).
• Pension, provident-fund or life-insurance deposits you made yourself rather than through payroll (sections 45A and 47).
• Donations to recognised institutions above 207 ₪ a year (section 46, 35% credit).
• A retirement grant or severance pay (form 161), where the tax split across years was not optimal.
• New immigrants (olim) and returning residents, who are entitled to extra credit points in their first years, and residents of eligible localities.

How many years back? 6, and 2020 closes at the end of 2026

The statute allows a refund claim for up to 6 years from the end of the tax year. In 2026 that means tax years 2020 through 2025. A claim for 2020 must be filed by 31 December 2026; after that the year is closed for good. Each year is a separate claim, and years can be filed together.

Which documents do you need? Form 106 from every employer, plus proof per ground

How and when is the refund paid?

The refund is paid by bank transfer, with linkage to the CPI plus 4% annual interest from the end of the tax year. For a plain employee claim the law sets the Tax Authority a window of one year from the assessment, or two years from the end of the year in which the tax was paid, whichever is later; in practice, per professional publications, it usually takes a few weeks to a few months depending on the workload at the assessing office.

When can a refund claim backfire? When it turns out you owe tax

Filing a claim means reporting the whole year. If you had untaxed income (rental income, freelance work on the side, foreign income) the computation can show a balance due instead of a refund. That is why I calculate first: if the result is a debt, I tell you so, and we decide together whether and how to file, rather than discovering it after submission.

What does it cost? The market charges a percentage of the refund

Refund firms in Israel typically charge a percentage of the refund, with lower rates for larger refunds, and some add a file-opening fee. My model: the eligibility check is free, the fee is a percentage agreed in advance, and it is charged only if a refund is actually received. If the calculation shows nothing is due, you pay nothing.

How I file an employee refund claim: five steps

1. 1
   Free eligibility check

   Send me your 106 forms over WhatsApp or email. I tell you within a few days whether a refund is likely, for which years, and roughly how much.
2. 2
   Collecting the documents

   A short list per ground: deposit certificates, donation receipts, 161, degree certificate. I tell you exactly what is missing.
3. 3
   Computation per year

   Each year is computed separately, with all credit points and deductions you are entitled to.
4. 4
   Filing

   I file the claims with the Tax Authority, online, with your authorisation as your representative.
5. 5
   Follow-up until payment

   I track the assessment, answer any questions from the assessing office and confirm when the refund lands in your account.