Per the Pashut Neto calculator, as of 2026 individuals in Israel pay 25% capital gains tax on the real (CPI-adjusted) gain for shares, funds and index-linked instruments, and 15% on the nominal gain for unlinked shekel instruments. Example: buying at 100,000 ₪ and selling at 130,000 ₪ with 10% cumulative inflation leaves a real gain of 20,000 ₪ and tax of 5,000 ₪ (versus 7,500 ₪ if computed nominally).
How is it calculated?
The calculator first finds the nominal gain: sale amount minus purchase amount. It then adjusts the purchase amount for the cumulative inflation over the holding period — whatever remains above the adjusted cost is the taxable real gain. For shares, funds and index-linked instruments the tax is 25% of the real gain; for unlinked shekel instruments (bank deposits, makam) it is 15% of the nominal gain — in that case enter 0 inflation. A substantial shareholder (holding 10% or more) pays 30% real or 20% nominal, respectively.
Example: buying at 100,000 ₪ and selling at 130,000 ₪ gives a nominal gain of 30,000 ₪. With 10% cumulative inflation the adjusted cost is 110,000 ₪, the real gain is 20,000 ₪ and the 25% tax comes to 5,000 ₪ — versus 7,500 ₪ nominally; the CPI adjustment changes the result significantly. Good to know: Israeli banks and brokers withhold the tax at source on sale; keren hishtalmut gains are tax-exempt within the ceiling; and taxpayers with taxable income above 721,560 ₪ per year pay a 3% surtax plus an extra 2% on capital-source income above the same threshold (since 2025) — bringing the total tax on large gains to 30%.
Frequently asked questions
Do stock market losses offset capital gains tax in Israel?
Yes. A capital loss from selling a security offsets capital gains in the same year, and unused losses carry forward to future years. The offset happens through the bank or via an annual return to the Israel Tax Authority, so tax is effectively paid only on the net gain.
Does the bank withhold capital gains tax automatically?
Yes. Israeli banks and investment houses withhold the tax at source when you sell — 25% on the real gain for securities or 15% nominal for shekel deposits. Investors with losses across several accounts, or who qualify for a relief, can reconcile via an annual tax return.
Is there a capital gains tax relief for people aged 60+?
Yes. Individuals aged 60 and over with low income can qualify for reduced rates: the gain can be taxed at the regular income tax brackets, which start below 25%, instead of the flat rate. The relief is not automatic — it is claimed by filing a return with the Israel Tax Authority.
This calculation is a general estimate for illustration only. It does not constitute tax, pension, or investment advice, nor a substitute for personal advice from a licensed professional, and should not be relied on for decisions.
