Tax credits for living in the North
Israel gives residents of more than 400 outlying towns a credit on their income tax. In the towns we cover it ranges from 7% to 20% of earned income, up to a yearly cap.
How it works
- The credit is a percentage of your earned income, up to an annual income cap set for each town.
- You must live in the town for at least 12 months in a row. The credit is then applied, including retroactively.
- Employees give their employer an updated Form 101 with a residence letter from the municipality. The self-employed claim it in their annual return.
- The list and the rates are updated every year, so check the current year’s list before you rely on it.
Rates in our towns, 2026
| Town | Credit | Income cap a year |
|---|---|---|
| Shlomi | 20% | ₪259,920 |
| Tzfat | 12% | ₪213,240 |
| Tiberias | 12% | ₪213,240 |
| Nahariya | 12% | ₪226,560 |
| Migdal | 10% | ₪180,000 |
| Katzrin | 10% | ₪180,000 |
| Rosh Pina | 7% | ₪146,640 |
| Yavniel | Not on the list | |
| Kfar Vradim | Not on the list | |
| Migdal HaEmek | Not on the list |
As a rough example: someone in Tzfat earning ₪200,000 a year could save up to about ₪24,000 a year in income tax (12% of ₪200,000), depending on their tax position.
General information, not tax advice. Ask an accountant how the credit applies to you.
Sources
Rates and caps from the Tax Authority’s 2026 deductions booklet, as compiled on 2 Aug 2026.