Salary earning residents of over 400 cities, towns and settlements are eligible to receive an income tax break, also known as the Periphery Tax Break.

This list of communities who are eligible for this break is generated according to scores received for three criteria: distance from the center of the country, proximity to the border and socio-economic level.

Towns that receive the tax break must have fewer than 75,000 residents, be close to a border and beyond certain northern, southern and eastern lines on the map. Also included is the western Negev, including towns near the Gaza border.

Towns with 25-49 points will get a seven percent tax break for annual salaries up to NIS 132,000.  Towns with 50-59 points get a discount of 10% for yearly pay up to NIS 162,000 and towns with 60-100 points receive a discount of 12% for earnings up to NIS 192,000.

In addition, some settlements in the Negev and Galilee will receive additional benefits in the amount of 1% to 6%.

For a full listing (in Hebrew) of towns and discounts received, click here.

To receive this tax break, one must have resided in the town for at least 12 consecutive months. The tax break is given retroactively once one’s residency of twelve months has been established.

To apply for this tax break, a salaried worker needs to update the Kartis Oved (Form 101) with his or her employer, and present the employer with a letter from the local municipality establishing residency.  Independent workers must submit the forms and residency letter to the Tax Authority once yearly, at the end of the tax year.

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