Tax changes for 2025

tax-changes-2025

Tax Changes for 2025: What You Need to Know and How to Prepare

As we approach 2025, significant tax changes are on the horizon for Israeli residents and businesses. These modifications aim to address the budget deficit while also introducing reforms that could benefit citizens. In this article, we’ll explore the key tax changes for 2025 and provide insights on how you can prepare for them.

Major Tax Changes Coming in 2025

VAT Increase

One of the most impactful tax changes for 2025 is the increase in Value Added Tax (VAT) from 17% to 18%. This 1% hike may seem small, but it can add up quickly, especially on large purchases. To minimize the impact of this change, consider making significant purchases before December 31, 2024. This could include:

• Real estate transactions

• Vehicle purchases 

• Expensive household appliances

Bituach Leumi Increases

Starting January 2025, you’ll see increases in your social security contributions:

• Health tax (ביטוח בריאות) will increase by 0.15% • Social security contributions (ביטוח לאומי) will rise by 0.8%

These changes will affect your take-home pay, so it’s essential to factor them into your 2025 budget planning.

Income Tax Adjustments

The מס יסף (surtax) on capital income is set to increase from 3% to 5% in January 2025. If you’re considering financial transactions such as distributing dividends or selling assets or shares, it may be advantageous to complete these before the end of 2024.

New Electronic Invoicing Model

The חשבונית ישראל (Israel Invoice) system will be gradually implemented. This system aims to streamline invoicing processes and reduce errors.

• 2025: Mandatory for invoices over NIS 20,000 (excluding VAT)

• 2028: Required for all invoices over NIS 5,000 (excluding VAT)

 

“Osek Zair” Reform

If your business has an annual turnover of less than NIS 120,000, you may be eligible for a simplified tax regime by registering as a “Osek Zair” before the end of 2024. This could potentially reduce your tax burden and simplify your reporting requirements.

Simplified Tax Credit for Charitable Donations

A new system will allow for automatic tax credits for charitable donations via your pay slip, eliminating the need for additional paperwork.

Preparing for the Tax Changes in 2025

As you can see, the tax changes for 2025 are extensive and could have a significant impact on your financial situation. To ensure you’re well-prepared, consider taking the following steps:

  • Review your budget and financial plans for 2025 and beyond
  • Plan major purchases before the VAT increase takes effect
  • Consult with a tax professional to understand how these changes will affect you personally
  • Ensure all your income and assets are properly declared to avoid potential penalties.

At Dray Accountants, we’re here to help you navigate these tax changes for 2025 and beyond. Our team of experienced professionals can provide personalized advice tailored to your unique situation. Don’t let these changes catch you off guard – contact us today to schedule a consultation and ensure you’re prepared for the road ahead.

Remember, proper planning now can lead to significant savings and peace of mind in the future. Let us help you make the most of these tax changes and keep your finances on track.

Ask an accountant

Boruch Levenson
Boruch Levenson – CPA

A native English speaker qualified in both Israel and the UK, Boruch cares for  the English speaking clients.

If you’ve got questions, don’t hesitate to reach out.

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Email : accounts@cpa-dray.com 

The information provided in this article is intended for general informational purposes only and should not be considered a substitute for personalized professional tax advice. Tax laws and regulations can be complex and vary depending on individual circumstances. We strongly recommend consulting with a qualified tax advisor to discuss your specific situation and ensure compliance with all applicable rules.

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Our firm specializes in Israeli accounting and taxation, our team of English speaking accountants have extensive expertise in the benefits granted to Olim Chadashim and their tax optimization.

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Address: 31 boulevard Rothschild, Tel-Aviv (Israel)
Telephone: 03-9446635
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Our advisors in Jerusalem

Cabinet Expert comptable Israel
Address: Kanfei Nesharim 68. Merkaz Oranim
Telephone: 02 631 9000
Fax: 02 631 9005
Email: accoutns@cpa-dray.com