What You'll Actually Make in Israel (And

Why Your Accountant is About to Become Your Best Friend)

Or: How I Learned That "Tax Benefits" Are the Three Most Beautiful Words in the English Language

Let me tell you about the moment I understood Israeli salaries. I was at a cafe in Tel Aviv—because where else would this story take place—and I overheard two Americans arguing about a job offer. One of them had just been offered a position at an Israeli tech company for ninety thousand dollars a year, and he was complaining that it was a pay cut from his San Francisco salary of one hundred and forty thousand dollars. His friend was trying to explain something about tax benefits and healthcare costs, but the first guy kept interrupting with "but it's fifty thousand dollars less!" with the kind of indignation usually reserved for discovering that your landlord is raising your rent for the third time this year.

What neither of them understood—what nobody tells you until you're already here and your accountant is explaining it to you with the kind of gleeful expression that accountants get when they're about to reveal good news—is that comparing gross salaries between countries is like comparing apples to hummus. They're both foods, technically, but the similarity ends there. You can't just look at the number on your offer letter and assume you understand your financial situation, because salaries exist within economic systems that include taxes, healthcare costs, childcare costs, education costs, and a whole constellation of other factors that make direct comparisons completely meaningless.

The guy in the cafe was comparing his one-forty San Francisco salary to his ninety-K Israeli offer and feeling poor. What he should have been calculating was this: his San Francisco take-home after taxes minus twenty-five thousand dollars per year for healthcare for his family minus thirty thousand dollars per year for childcare for his two kids minus the extra two thousand dollars per year he was spending on groceries in the Bay Area minus his student loan payments, compared to his Israeli take-home after taxes with zero healthcare costs and affordable childcare and with ten years of foreign income tax exemptions if he qualified as a new immigrant. When you do that math, suddenly the Israeli offer might actually be better, or at least competitive, but nobody does that math because it's complicated and requires understanding tax systems in multiple countries and also accepting that the way you've thought about money for your entire life might be wrong.

So let's talk about salaries, and taxes, and most importantly, about the absolutely wild tax benefits that new immigrants to Israel receive, which are so generous that they feel like a glitch in the system that someone will eventually fix but hasn't yet. These benefits can be worth hundreds of thousands of dollars over a decade, and most people don't know about them until they're already in Israel, at which point they feel like they've discovered a cheat code to life. But I'm getting ahead of myself. Let's start with the basics: what do people actually earn in Israel, and how does it compare to what they'd earn in other countries?

The Salary Reality Check: What People Actually Make

Here's the uncomfortable truth about Israeli salaries: they are lower than American salaries for almost every profession. Not a little lower. Significantly lower. Sometimes dramatically lower. If you're a doctor in America, you make two hundred thousand to two hundred and fifty thousand dollars per year. In Israel, you make eighty thousand to one hundred and twenty thousand dollars per year. That's less than half. If you're a nurse in America, you make seventy thousand to ninety thousand dollars per year. In Israel, you make thirty-five thousand to fifty thousand dollars per year. Again, less than half. Teachers in America make fifty thousand to seventy thousand dollars per year. In Israel, teachers make thirty thousand to fifty thousand dollars per year, which is barely enough to live on, which is why teachers in Israel are constantly on strike, which is extremely justified.

But before you start feeling too depressed about Israeli salaries, remember that thing I mentioned about economic systems and how comparing gross numbers is meaningless? Let's talk about what happens to that money after it leaves your bank account and gets devoured by the various entities that want a piece of it. Because that's where things get interesting, and by "interesting" I mean "potentially less terrible than they initially appear."

Let's take a software engineer, because tech workers are the only people in Israel who make anything approaching real money. A software engineer in Israel makes seventy thousand to one hundred and ten thousand dollars per year. In America, that same engineer makes ninety thousand to one hundred and fifty thousand dollars per year. In the UK, they make sixty thousand to one hundred thousand dollars. In Canada, they make seventy thousand to one hundred and twenty thousand dollars. On paper, America wins. America always wins on paper. This is America's thing: being good on paper.

But let's follow that money through the system and see what actually happens to it. In America, you'll pay federal income tax, state income tax (in most states), Social Security tax, Medicare tax, and if you're really lucky, local city tax too because apparently one level of taxation isn't enough. Your total tax burden will be somewhere between twenty-five and thirty-five percent depending on which state you live in, and that's before we talk about healthcare.

American healthcare is where the real fun begins. If you're a healthy single person, you'll pay somewhere between four hundred and eight hundred dollars per month for health insurance, which is forty-eight hundred to ninety-six hundred dollars per year just for the privilege of having insurance. Then, when you actually use that insurance, you'll discover the joys of deductibles, copays, and out-of-pocket maximums. You'll pay twenty to fifty dollars every time you see a doctor. You'll pay forty to seventy-five dollars every time you see a specialist. If you need surgery, you'll pay your deductible first, which is probably fifteen hundred to three thousand dollars, and then you'll pay a percentage of everything after that until you hit your out-of-pocket maximum, which is probably five thousand to eight thousand dollars per year.

So your health insurance premium is forty-eight hundred to ninety-six hundred dollars per year, and if you actually get sick or injured, you'll pay another two thousand to eight thousand dollars in out-of-pocket costs, bringing your total annual healthcare spending to sixty-four hundred to seventeen thousand six hundred dollars per year. And this is for a single healthy person. If you have a family, multiply everything by about three, and your annual healthcare costs are now twenty thousand to thirty thousand dollars, which is roughly equivalent to buying a used car every single year and then immediately driving it off a cliff.

But we're not done! Let's talk about student loans, because if you're American and you went to college, you probably have student loans. The average American with student debt owes thirty-seven thousand dollars, with monthly payments of two hundred to four hundred dollars, which works out to twenty-four hundred to forty-eight hundred dollars per year. If you went to graduate

school or a private university, you might owe one hundred thousand dollars or more, with monthly payments of one thousand dollars or higher, which is twelve thousand dollars per year going to pay for an education you received a decade ago and are still financially recovering from.

Now let's look at Israel. Israeli taxes are higher than American taxes, which sounds bad until you remember what you get for those taxes. Your total tax burden as a single person will be somewhere between twenty-five and forty percent depending on your income level. At seventy thousand dollars per year, you'll pay about twenty-five percent in taxes. At one hundred thousand dollars per year, you'll pay about thirty percent. At one hundred and fifty thousand dollars, you'll pay about thirty-five percent. These rates are comparable to or slightly higher than American rates, which means at first glance, Israel looks worse.

But here's where it gets interesting: that tax money pays for your healthcare. All of it. Completely. You don't pay health insurance premiums. You don't pay deductibles. You don't pay copays for most things. You pay maybe fifty dollars per year if you want supplementary insurance to get nicer hospital rooms and shorter wait times, but basic coverage is included in your taxes. Doctor visits are free. Specialist visits are free. Surgery is free, or costs maybe five hundred dollars maximum for complex procedures. Medications cost three to ten dollars per prescription. Having a baby costs zero to five hundred dollars total. Not dying from treatable conditions is free. Your annual healthcare spending in Israel, including everything, is probably three hundred to eight hundred dollars per year compared to sixty-four hundred to seventeen thousand six hundred dollars per year in America.

Let's do some math that will make Americans angry. If you're paying an extra ten percent in Israeli taxes on a one hundred thousand dollar salary, that's an extra ten thousand dollars per year in taxes. But you're saving at least six thousand to seventeen thousand dollars per year on healthcare costs compared to America. So even with higher taxes, you're coming out ahead by negative four thousand to seven thousand dollars. Negative because you're actually saving money. The higher taxes more than pay for themselves through healthcare savings alone, and we haven't even talked about university tuition yet, or childcare, or the fact that Israeli universities cost four thousand dollars per year instead of forty thousand dollars per year, which means you won't have student loans, which means that's another two thousand to twelve thousand dollars per year you're not spending on debt payments.

But wait, there's more! And this is where things get truly wild. If you move to Israel as a new immigrant, you qualify for something called "new resident" or "returning resident" status for tax purposes, which comes with benefits so generous that they feel illegal even though they're completely legal and also you should definitely use them because the Israeli government is basically begging you to take advantage of them.

The Oleh Tax Benefits: Or, How Israel Accidentally Created the Best Tax Loophole in the World

Okay, listen. What I'm about to tell you sounds too good to be true. It sounds like a scam. It sounds like something that will get you audited and possibly imprisoned. But it's real, it's legal, it's government-sanctioned, and if you move to Israel and qualify, you should absolutely use these benefits because they can save you hundreds of thousands of dollars over a decade.

When you make aliyah—when you move to Israel as a new immigrant—you can qualify for something called "toshav chadash" status, which means "new resident." This status comes with a package of tax benefits that last for ten years. Ten. Years. A full decade of preferential tax treatment

that can fundamentally change your financial situation. The benefits are so good that rich people occasionally make aliyah just for the tax advantages, stay for ten years, and then leave, which probably isn't what the Israeli government intended but is absolutely what happens.

Here's what you get: for ten years after becoming an Israeli resident, all foreign-source income is exempt from Israeli taxation. All of it. Completely. If you work remotely for an American company while living in Israel, you pay zero Israeli taxes on that income. If you own rental property in the UK, you pay zero Israeli taxes on that rental income. If you have investment accounts in Canada that generate dividends, you pay zero Israeli taxes on those dividends. Only income that is sourced from Israel—like working for an Israeli company or owning Israeli property—is subject to Israeli taxation.

Let me give you a concrete example so you understand how insane this is. Let's say you're a software engineer who gets a job at an American tech company that allows remote work. Your salary is one hundred and fifty thousand dollars per year. You move to Tel Aviv, you establish residency, you qualify as a new resident for tax purposes. You work from your apartment in Tel Aviv, attending Zoom meetings with your American colleagues while sitting on your tiny balcony overlooking a street with no fewer than seventeen cafes. The money you earn is from an American company, so it's considered foreign-source income, which means for Israeli tax purposes, it's exempt.

Zero. Zero Israeli taxes on one hundred and fifty thousand dollars of income. For ten years.

You still have to pay American taxes, because America taxes its citizens regardless of where they live, because America is like that friend who won't let you leave the group chat. But you can claim the Foreign Earned Income Exclusion, which for 2025 is about one hundred and twenty-six thousand dollars, which means the first one-twenty-six is tax-free. On the remaining twenty-four thousand dollars, you pay American taxes at the federal rate, which is maybe twenty-two percent, so about fifty-three hundred dollars. Your total tax burden on one hundred and fifty thousand dollars of income is fifty-three hundred dollars, which is an effective tax rate of 3.5 percent.

Three point five percent. On one hundred and fifty thousand dollars. For ten years. That's five hundred and thirty dollars per ten thousand dollars earned, compared to roughly twenty-five hundred to thirty-five hundred dollars per ten thousand dollars earned if you were paying normal taxes in America or Israel. Over ten years, at one hundred and fifty thousand dollars per year, you save somewhere in the ballpark of three hundred thousand to four hundred and fifty thousand dollars in taxes. That's enough money to buy a house. A nice house. In Israel, it's enough for a down payment on a modest apartment. But still. That's real money.

"But wait," you say, "surely there are catches. Surely this is too good to be true. Surely the Israeli tax authority will show up at my door and demand explanations." And you're right that there are rules and requirements, but they're not that onerous. To qualify as a new resident, you need to have been a non-resident of Israel for at least six out of the previous ten years. If you're making aliyah for the first time, you automatically qualify. If you're returning after living abroad for years, you probably qualify. You need to actually live in Israel—you can't just claim residency while living in Miami and occasionally visiting for holidays. You need to establish that Israel is your primary residence, your center of life, the place where you actually exist as a human being. And you need to file for new resident status with the Israeli tax authority and get approval, which requires paperwork and possibly the assistance of an Israeli accountant who specializes in this exact situation, which is all of them because this is their bread and butter.

But assuming you qualify and you do the paperwork correctly, which you should because the stakes are too high to mess this up, you get ten years of the most favorable tax treatment available in any

developed country. It's not a loophole. It's not a grey area. It's explicitly written into Israeli tax law because the government wants to attract immigrants, especially high-earning immigrants who will contribute to the economy, and they've decided that the way to do this is to offer tax benefits so generous that they're essentially paying you to move here.

And it's not just salary income. Capital gains from foreign sources are also exempt. If you sell stock in American companies and make a profit, that profit is tax-free in Israel for ten years. If you sell property in another country and make a capital gain, tax-free in Israel. If you cash out your startup equity after an acquisition, tax-free in Israel, assuming the company is foreign. This is how wealthy people compound their wealth: they move to places with favorable tax treatment, they realize their capital gains while living there, and they avoid paying the thirty to forty percent in taxes they would have paid in their home countries.

Foreign pensions and retirement accounts also get favorable treatment. Your 401(k), your IRA, your Roth IRA, your foreign pension plans—they continue to grow tax-deferred, and when you start taking distributions, they're often exempt or taxed at favorable rates depending on the specific situation and the tax treaties between Israel and your home country. This is huge for people with substantial retirement savings, because normally when you move countries, you have to figure out how your retirement accounts are treated in the new tax system, and often the answer is "poorly" or "in a way that will make you cry." But Israel has thought about this and created rules that mostly don't punish you for having saved for retirement.

Now, I need to be clear about something: these benefits require proper planning and professional advice. Israeli tax law is complex. International tax law is even more complex. The interaction between Israeli tax law, American tax law, and the tax treaties between the two countries is complex enough that it requires multiple college degrees to fully understand. Do not, under any circumstances, try to figure this out yourself. Hire an Israeli accountant who specializes in olim chadashim and new resident status. They will charge you five hundred to fifteen hundred dollars for a consultation and tax filing, which sounds like a lot until you remember that they're helping you save fifty thousand dollars per year in taxes, at which point their fee seems remarkably reasonable.

Also, these benefits only apply if you properly establish new resident status. If you don't file for it, if you miss the deadline, if you do the paperwork wrong, you don't get the benefits. The Israeli tax authority is not going to chase you down and say "hey, you forgot to claim your massive tax exemptions!" They're perfectly happy to tax your foreign income if you don't explicitly claim the exemption, so you need to be proactive about this. File for new resident status as soon as possible after making aliyah. Get professional help. Do it right. The stakes are too high to be casual about this.

And finally, these benefits are so good that they create perverse incentives. There are definitely people who make aliyah purely for the tax advantages, live in Israel for ten years while paying minimal taxes, and then leave. Israel probably doesn't love this, but it happens. There are also people who structure their income specifically to maximize their foreign-source income during the ten-year period, which is smart tax planning but also feels like gaming the system, which it is, but it's legal gaming of the system, which is the best kind. You can hire an Israeli accountant who will help you structure things optimally, and they will do this with a completely straight face, because this is how the system works and everyone knows it and it's fine.

The Other Oleh Benefits: Or, More Free Money From the Government

The tax benefits alone are worth the price of admission, but wait, there's more! When you make aliyah, the Israeli government gives you other benefits designed to help you establish yourself in your new country. Some of these benefits are substantial. Some are modest. All of them are worth understanding and claiming because free money is free money and we're not too proud to take it.

First, there's the sal klita, which translates to "absorption basket" and means "money." The government gives you money just for showing up. The amount varies based on your family size, but a single person receives about six thousand to eight thousand dollars total, paid out over six months to a year. A couple receives about twelve thousand to fifteen thousand dollars. A family of four receives about twenty thousand to twenty-five thousand dollars. This is free money. You don't pay it back. It's not a loan. It's a grant from the government that says "welcome to Israel, here's some cash to help you get started, please don't leave immediately."

For most people, the sal klita covers your first few months of expenses while you're getting settled, finding a job, and figuring out how to navigate a country where everyone speaks too fast and the bureaucracy operates on principles that predate modern civilization. It's enough to pay rent for a few months, buy some furniture, get through the initial transition period without panicking about money. If you're smart about it, you can stretch it further by living modestly, but most people spend it fairly quickly on setup costs like security deposits, appliances, and the psychological comfort of knowing they have a financial cushion.

The sal klita is administered either by the Ministry of Aliyah and Integration or by Nefesh B'Nefesh if you're coming from North America. NBN is generally more efficient and helpful, which is why everyone loves them and why Americans and Canadians making aliyah have an easier time than people from other countries. Nefesh B'Nefesh also provides other benefits and support services, like help finding jobs, assistance with bureaucracy, integration programs, and generally holding your hand through the process of becoming Israeli, which is valuable because becoming Israeli is difficult and confusing and occasionally makes you want to cry.

Second, there's arnona discounts. Arnona is the municipal property tax that you pay every month for the privilege of your apartment existing at a specific address, as discussed in the previous article where I complained about it extensively. New immigrants get a ninety percent discount on arnona for the first year, and then the discount gradually decreases over the next nine years until year ten, when you pay full price like everyone else. This saves you a substantial amount of money. If full arnona is one hundred and eighty dollars per month in Tel Aviv, a ninety percent discount means you pay eighteen dollars per month in year one, which is the difference between manageable and painful. Over ten years, the total savings from arnona discounts is probably ten thousand to fifteen thousand dollars, which is real money that you can spend on other things like groceries or therapy.

Third, there are customs benefits. When you make aliyah, you can import your household goods duty-free, which saves you thousands of dollars if you're shipping furniture and appliances. You can also import one vehicle duty-free or with substantial duty reductions, which saves you twenty thousand to fifty thousand dollars if you're bringing a car, although honestly you shouldn't bring a car because cars are expensive to maintain in Israel and you'll regret it, but some people do it anyway and at least they get the customs benefit.

Fourth, there are educational benefits. If you have kids in university or you're going to university yourself, new immigrants get tuition discounts at Israeli universities for the first year or two. The discount varies by institution, but it's meaningful. Israeli university tuition is already cheap compared to America at four thousand dollars per year instead of forty thousand dollars per year, and with the new immigrant discount, it's even cheaper. If you're paying two thousand dollars per

year for university, you're basically being paid to get educated, at least compared to American standards where you mortgage your future to afford a degree.

Fifth, there's health insurance. Okay, technically everyone in Israel has health insurance through the national system, so this isn't a special oleh benefit. But as a new immigrant, you get health insurance immediately upon arrival, no waiting period, pre-existing conditions covered, no questions asked. You choose one of four health funds, you register, and boom, you have comprehensive healthcare. This isn't special compared to other Israelis, but it's special compared to Americans who are used to health insurance being tied to employment and losing coverage being a constant source of anxiety. In Israel, you have health insurance just for existing, which is how civilized countries work.

Sixth, there are various small discounts and benefits on things like professional licensing, business registration fees, and language classes. Ulpan, which is intensive Hebrew language instruction, is free for new immigrants. You can study Hebrew for several months at government expense, which is fantastic because you need Hebrew to function in Israeli society, and learning Hebrew is hard enough without having to pay for it. These benefits add up to maybe a few thousand dollars over your first few years, which isn't huge but it's not nothing.

Add everything up—sal klita, arnona discounts, customs benefits, educational benefits, professional support, ulpan—and new immigrants receive somewhere between thirty thousand and fifty thousand dollars in direct benefits and savings over their first ten years in Israel, not including the tax benefits, which are worth ten times that. The Israeli government is essentially paying you to immigrate, which makes sense from their perspective because they need immigrants for demographic and economic reasons, but from your perspective, it means you're starting your new life with a significant financial advantage that native Israelis don't have.

The Real Comparison: Apples to Hummus

Now let's do the thing that the guy in the cafe should have done: let's compare actual take-home money after accounting for taxes, healthcare, benefits, and all the other factors that determine your real financial situation. We'll look at three scenarios: a software engineer, a teacher, and a family with kids.

Scenario 1: Software Engineer, Single, No Kids

**Israeli Salary: $100,000/year **After Israeli taxes (30%): $70,000/year Healthcare: -$600/year (supplemental insurance) Student loans: $0 (Israeli university cost $12,000 total) Professional expenses: -$1,000/year Take-home: $68,400/year

But wait! If this person works remotely for an American or European company and qualifies as a new resident, they pay zero Israeli taxes on that income for ten years: After American taxes with FEIE: $95,000/year Healthcare: -$600/year Take-home: $94,400/year (with new resident status)

**American Salary: $120,000/year **After American taxes (25% effective): $90,000/year Healthcare:

-$7,200/year (insurance premium) Out-of-pocket medical: -$2,000/year (average) Student loans: -

$4,800/year (average) Take-home: $76,000/year

**UK Salary: $80,000/year **After UK taxes (32%): $54,400/year Healthcare: -$0 (NHS) Student loans: -$2,400/year Take-home: $52,000/year

**Canadian Salary: $95,000/year **After Canadian taxes (30%): $66,500/year Healthcare: -$600/year (supplemental) Student loans: -$3,000/year Take-home: $62,900/year

Summary:

ï           Israel (regular taxes): $68,400 take-home

ï           Israel (new resident, remote work): $94,400 take-home ← WINNER

ï           America: $76,000 take-home

ï           UK: $52,000 take-home

ï           Canada: $62,900 take-home

With new resident status and foreign income, the Israeli software engineer takes home more than anyone else, even though the Israeli salary is lower than America. Without new resident status, Israel is still competitive with America because healthcare and student loans matter. The UK loses because salaries are lower and taxes are high. Canada is in the middle.

Scenario 2: Teacher, Single, No Kids

**Israeli Salary: $40,000/year **After Israeli taxes (20%): $32,000/year Healthcare: -$600/year Student loans: $0 Take-home: $31,400/year

**American Salary: $60,000/year **After American taxes (18%): $49,200/year Healthcare: -$6,000/ year Out-of-pocket: -$1,500/year Student loans: -$4,800/year (teachers have high student debt) Take-home: $36,900/year

**UK Salary: $45,000/year **After UK taxes (28%): $32,400/year Healthcare: -$0 Student loans: -

$2,000/year Take-home: $30,400/year

**Canadian Salary: $55,000/year **After Canadian taxes (26%): $40,700/year Healthcare: -$600/year Student loans: -$2,500/year Take-home: $37,600/year

Summary:

ï           Israel: $31,400 take-home ← Israel loses this one

ï           America: $36,900 take-home ← WINNER

ï           UK: $30,400 take-home

ï           Canada: $37,600 take-home

Teachers actually do better in America or Canada than Israel because the Israeli teacher salary is genuinely low. This is why Israeli teachers are constantly striking. However, the gap is smaller than it looks because Israeli teachers don't have student loans (university was cheap) and healthcare is included. Still, teaching in Israel is financially challenging.

Scenario 3: Family of Four (Two Working Parents, Two Kids)

**Israeli Combined Income: $130,000/year **After Israeli taxes (28%): $93,600/year Healthcare: -

$1,000/year Childcare (2 kids): -$12,000/year School expenses: -$3,000/year Student loans: $0 Take-home: $77,600/year

With new resident status working remotely: After taxes: $118,000/year Healthcare: -$1,000/year Childcare: -$12,000/year School: -$3,000/year Take-home: $102,000/year

**American Combined Income: $150,000/year **After American taxes (24%): $114,000/year Healthcare: -$22,000/year (family plan) Out-of-pocket: -$4,000/year Childcare (2 kids): -$36,000/

year School expenses: -$4,000/year Student loans: -$8,000/year Take-home: $40,000/year ← THIS IS WHY AMERICANS CAN'T HAVE NICE THINGS

**UK Combined Income: $110,000/year **After UK taxes (30%): $77,000/year Healthcare: -$1,500/ year (supplemental) Childcare: -$28,000/year School expenses: -$3,500/year Student loans: -

$4,000/year Take-home: $40,000/year

**Canadian Combined Income: $130,000/year **After Canadian taxes (28%): $93,600/year Healthcare: -$1,000/year Childcare: -$26,000/year School expenses: -$3,500/year Student loans: -

$5,000/year Take-home: $58,100/year

Summary:

ï           Israel (regular): $77,600 take-home ← WINNER

ï           Israel (new resident): $102,000 take-home ← MEGA WINNER

ï           America: $40,000 take-home ← American families are getting destroyed

ï           UK: $40,000 take-home

ï           Canada: $58,100 take-home

This is the most dramatic comparison because childcare and healthcare costs in America and the UK are absolutely devastating to families. American and British families with young kids are being financially crushed by childcare costs that consume forty to sixty percent of their post-tax income. Israeli families pay a fraction of that because childcare is heavily subsidized. Canadian families are somewhere in between—better than America but worse than Israel.

If you're a family with young kids considering where to live, Israel is financially superior to America or the UK by a shocking margin. Even without the new resident tax benefits, Israeli families keep significantly more of their income because they're not hemorrhaging money on childcare and healthcare. With the new resident benefits, it's not even close. Israeli families in this scenario have literally double the disposable income of American families.

The Tax Comparison: What You Actually Pay

Let's break down the tax situation more clearly because this is important and confusing. Different countries have different tax structures, different brackets, different deductions, and different ways of making you feel bad about earning money.

United States

American federal income tax rates for 2025 (single filer):

ï           10% on income up to $11,000

ï           12% on income $11,000 - $44,725

ï           22% on income $44,725 - $95,375

ï           24% on income $95,375 - $182,100

ï           32% on income above that Plus:

ï           Social Security tax: 6.2% (up to $168,600)

ï           Medicare tax: 1.45% (on all income)

ï           State income tax: 0-13% depending on state (California is 13%, Texas is 0%, most states are 3-6%)

Total effective tax rate on $100,000: 25-35% depending on state What you get for your taxes:

ï           Infrastructure that's falling apart

ï           A military that costs more than the next ten countries combined

ï           Social Security that might not exist when you retire

ï           Healthcare: lol no, you pay separately

ï           Education: lol no, you pay separately

ï           Childcare: lol no, you pay separately

United Kingdom

UK income tax rates 2025 (England):

ï           0% on income up to £12,570 (personal allowance)

ï           20% on income £12,570 - £50,270

ï           40% on income £50,270 - £125,140

ï           45% on income above that Plus:

ï           National Insurance: ~12% on income up to £50,270, then 2% above Total effective tax rate on £60,000 ($75,000): 32%

What you get:

ï           NHS (free healthcare, waiting times vary from "reasonable" to "heat death of the universe")

ï           Decent infrastructure

ï           Free university in Scotland (if you're Scottish)

ï           The knowledge that you're supporting a monarchy that exists primarily for tourism

Canada

Canadian federal tax rates 2025:

ï           15% on income up to CAD $53,359

ï           20.5% on income $53,359 - $106,717

ï           26% on income $106,717 - $165,430

ï           29% on income above that Plus:

ï           Provincial tax: 5-25% depending on province (varies significantly)

ï           CPP (Canada Pension Plan): ~5.95%

ï           EI (Employment Insurance): ~1.66%

Total effective tax rate on CAD $100,000: 28-35% depending on province What you get:

ï           Universal healthcare (works well in most provinces)

ï           Good infrastructure

ï           Affordable university (CAD $6,000-8,000/year for citizens)

ï           Politeness as a cultural value

ï           Winter that lasts six months

Israel

Israeli income tax rates 2025:

ï           10% on income up to ₪81,480 (~$22,000)

ï           14% on income ₪81,480 - ₪116,880 (~$22,000 - $31,600)

ï           20% on income ₪116,880 - ₪182,880 (~$31,600 - $49,400)

ï           31% on income ₪182,880 - ₪260,880 (~$49,400 - $70,500)

ï           35% on income ₪260,880 - ₪545,880 (~$70,500 - $147,500)

ï           47% on income above ₪545,880 (~$147,500+) Plus:

ï           National Insurance (Bituach Leumi): ~12% (capped)

ï           Health tax: ~3-5% (included in Bituach Leumi) Total effective tax rate on $100,000: 30-35%

BUT with new resident status: Total effective tax rate on $100,000 of foreign income: 0-3.5% What you get:

ï           Universal healthcare (good quality, short wait times)

ï           Heavily subsidized childcare

ï           Free K-12 education

ï           Cheap university ($3,000-4,000/year)

ï           Constant arguments with strangers about politics (free entertainment)

ï           The knowledge that your tax money is mostly going to defense, which is depressing but necessary

The Student Loan Factor: The Silent Wealth Destroyer

Here's something Americans don't think about until it's too late: student loans are a financial cancer that metastasizes through your entire adult life. The average American with a bachelor's degree has

$37,000 in student debt. If you went to graduate school, that number might be $80,000 to $200,000. Monthly payments range from $200 to $2,000 or more, which is $2,400 to $24,000 per year, for ten to thirty years.

Let's think about what this means. If you're paying $400 per month in student loans from age twenty-two to age thirty-two—a pretty typical scenario—that's $4,800 per year for ten years, or

$48,000 total. That's a down payment on a house. That's a car. That's a year of living expenses. That's the opportunity cost of having gone to an American university instead of a university in literally any other developed country where education is affordable.

Israeli university costs $3,000-4,000 per year. For a four-year degree, that's $12,000-16,000 total. Most Israeli students live at home or share apartments with friends, so living expenses are split. Even if you take out loans for living expenses, you graduate with maybe $20,000-30,000 in debt instead of $40,000-80,000. Your monthly payment is $200-300 instead of $400-800. You pay off your loans in five to seven years instead of ten to thirty. You spend $15,000-20,000 on loan repayment instead of $50,000-200,000.

This difference compounds over your lifetime. The American who pays $400/month in student loans from age twenty-two to thirty-two has $48,000 less to save, invest, or spend on starting a life. If that money were invested instead of going to loan payments, at a 7% return over thirty years, it would grow to $366,000. That's how much the American university system costs in opportunity cost. That's how much wealthier you could be by going to a cheaper university system.

Israeli university graduates don't have this albatross around their necks. They graduate, they get jobs, and their money is theirs to keep instead of going to loan servicers who will hunt them down like the Mossad tracking Nazi war criminals. This is an enormous advantage that doesn't show up in salary comparisons but dramatically affects your actual financial situation.

The Healthcare Factor: The Other Silent Wealth Destroyer

American healthcare costs are so insane that they deserve their own section. The average American family spends about $25,000 per year on healthcare costs including premiums, deductibles, copays, and out-of-pocket expenses. That's after-tax money, which means you need to earn about $33,000 before taxes to have $25,000 left for healthcare. That's a significant chunk of your income going to an industry that actively tries to deny you coverage when you need it.

In Israel, your healthcare costs are about $600-1,000 per year total for a family, including supplemental insurance if you want it. The difference is $24,000-24,400 per year. Over a lifetime of forty working years, that's $960,000 to $976,000 in healthcare savings. Almost a million dollars that you're not spending on healthcare. Almost a million dollars that you can spend on literally anything else: housing, education, retirement, travel, starting a business, buying a yacht, becoming a patron of the arts, or just having money in your bank account that isn't being siphoned away by health insurance companies.

This is not an exaggeration. This is the actual difference in healthcare costs. American healthcare is so expensive that it's one of the primary causes of bankruptcy in America. Medical debt is the leading cause of personal bankruptcy. People avoid going to the doctor because they can't afford it. People die because they can't afford insulin. This is not hyperbole. This is reality. And the truly insane part is that Americans have been convinced this is normal, that this is just how healthcare works, when every other developed country has figured out how to provide healthcare at a fraction of the cost.

Israeli healthcare isn't perfect. Wait times for specialists can be long. Some medications aren't covered. Hospital food is bad. But nobody goes bankrupt from medical bills. Nobody avoids seeing a doctor because of cost. Nobody dies because they can't afford insulin. Healthcare is a right, not a luxury, and the financial impact on families is dramatic.

The Childcare Factor: Why American Parents Are Suffering

American childcare costs are genuinely criminal. The average cost of infant daycare in America is

$15,600 per year. For two kids, that's $31,200 per year. That's after-tax money, which means you need to earn about $42,000 before taxes to pay for childcare. For many families, one parent's entire salary goes to childcare, which raises the question of why that parent is working at all. The answer is usually healthcare (insurance is tied to employment) and career continuity, but financially, it barely makes sense.

In Israel, infant daycare costs $7,200-10,800 per year with subsidies. For two kids, that's

$14,400-21,600 per year. That's roughly half the American cost, and it's less than half for preschool ages three to five, where Israeli preschool is essentially free while American preschool costs

$9,600-16,800 per year.

The difference for a family with two young kids is about $20,000-30,000 per year in childcare costs. Over five years—birth through kindergarten—that's $100,000-150,000 in savings. That's enough to change your entire financial trajectory. That's the difference between saving for

retirement and living paycheck to paycheck. That's the difference between owning a home and renting forever. That's the difference between financial stability and financial stress.

This is why Israeli families with kids often have more disposable income than American families earning higher salaries. The systemic costs of raising children in America are so high that they overwhelm the salary advantage. In Israel, the government subsidizes childcare because they want people to have children for demographic reasons, and those subsidies directly benefit families in ways that dramatically improve their financial situations.

The Real Calculation: What You Keep, Not What You Earn

After all this analysis, here's the conclusion that nobody wants to hear: comparing gross salaries between countries is completely meaningless. What matters is what you keep after all the systemic costs are paid. An American making $150,000 might keep $60,000 after federal taxes, state taxes, healthcare, childcare, and student loans. An Israeli making $100,000 might keep $70,000 after taxes and minimal other expenses. Who's richer? The Israeli. Who has the higher salary? The American. Who cares about salary if you're keeping less money?

This is especially true for new immigrants to Israel who qualify for new resident tax status. Those ten years of foreign income exemption can be worth $200,000-500,000 in tax savings depending on your income level. That's generational wealth. That's retire-early money. That's financial security.

And it's completely legal and explicitly encouraged by the Israeli government.

So when someone asks "what will I make in Israel?" the answer is: probably less than you'd make in America, but possibly more than you'd keep in America. And if you work remotely for a foreign company during your first ten years, you might keep significantly more than you'd keep anywhere else because you're benefiting from Israeli quality of life and social services while paying minimal taxes.

Is this fair? Probably not. Does it create perverse incentives? Definitely. Should you take advantage of it if you're making aliyah? Absolutely, yes, one hundred percent, without question, hire an accountant immediately and claim every benefit you're entitled to because the Israeli government is essentially begging you to take their money and you should take it.

The guy in the Tel Aviv cafe arguing about his $90,000 salary offer should have stopped complaining about the gross number and started calculating his net situation after accounting for healthcare savings, childcare savings, potential tax benefits, and cost of living differences. He might have realized that his Israeli offer was actually competitive with or better than his San Francisco situation, especially if his family had kids. But he was focused on the wrong number—the gross salary—instead of the number that actually matters: what he keeps.

That's the thing about comparing salaries internationally. The gross number is essentially meaningless. What matters is your real purchasing power after all the systemic costs. And in Israel, especially with new immigrant benefits, that purchasing power can be surprisingly high even when your gross salary looks low. It's counterintuitive. It's complicated. It requires spreadsheets and tax calculations and thinking about things you'd rather not think about.

But it's also potentially one of the best financial decisions you could make, assuming you want to live in Israel for reasons beyond money, because let's be honest: nobody moves to Israel purely for financial reasons. You move for family, or ideology, or identity, or because you're running from something, or toward something, or because you're Jewish and this is the ancestral homeland and that means something to you even if you can't quite articulate what.

The financial stuff is just the stuff that makes it possible to live here without going completely broke. And as it turns out, with proper planning and by claiming all the benefits you're entitled to, it's not only possible—it's potentially better than staying wherever you are.

But you definitely need to hire an accountant. And they'll become your best friend. Because they're the wizard who makes your money not disappear, and in Israel, that's the most valuable magic there is.

Updated on: 01/02/2026