Did you know? In Israel, employees and self-employed individuals are entitled to tax refunds that they’re often unaware of. Anyone who donated 207NIS or more during the year (as of 2024) can receive back 35% of the donation amount.
Most Israelis donate to institutions or nonprofits throughout the year. Sometimes these donations are recurring through automatic payments or credit cards, sometimes they’re one-time contributions to youth collecting door-to-door for various causes, and sometimes amounts paid to synagogues also count as donations. The Israeli government encourages charitable giving by recognizing donation amounts for income tax purposes under “Section 46 of the Income Tax Ordinance,” allowing donors to receive back a significant portion of their contribution.
Who Is Eligible for a Tax Refund on Donations?
- Individuals and businesses not incorporated as limited companies, eligible for a credit of 35% of the donation amount. If you donated more than 207 NIS during the year and paid taxes during that year, you’re entitled to a refund.
- Businesses incorporated as limited companies, eligible for a credit at the current corporate tax rate for the year the donation was made.
- Make sure the institutions you donated to are recognized for tax refund purposes.
- You can receive a tax refund for donations up to six years retroactively, with original receipts documenting the donation.
What Do You Need to Do?
Collect all original receipts you received for donations you made during the past year to institutions with Section 46 approval under the Income Tax Ordinance.
For Employees:
- Print a copy of your November pay stub
- Complete Form 116 from the Israel Tax Authority online or submit the request at the tax assessor’s office nearest to your place of residence
Some employers allow you to submit the request directly to them, and they’ll process the deduction with the Israel Tax Authority. It’s definitely worth checking with your employer. You can receive a document for your employer that will allow them to credit you the tax in your next paycheck.
For Self-Employed Individuals and Employees Filing Annual Returns:
You’ll need to complete Form 1301 (annual report) at year’s end and attach the original donation receipts.
Eligible Charitable Organizations
How do you know if the organization you donated to qualifies for a tax refund?
First, it should be stated explicitly on the donation receipt from the organization. Second, you can simply search the Israel Tax Authority’s “Institutions for Donation Purposes” page for the file number or name of the organization you donated to and see if it exists in the database.
Note: The information above does not substitute for professional tax or legal advice. Don’t rely on this information without consulting a tax advisor, accountant, or attorney who specializes in this area before taking any action or making any decision. This information is accurate as of the time of writing only and may change over time.
Ready to claim what’s yours? Gather those receipts and take action, that refund is waiting for you!
