Essential Year-End 2026 Tax Strategies for Employees and Self-Employed
CPA Yoram Shifer outlines crucial year-end tax strategies for 2026, helping employees and self-employed individuals maximize deductions, pension contributions, and refunds before December 31.
As the 2026 tax year draws to a close, year-end financial preparation is critical for both employees and the self-employed to maximize tax refunds and minimize liabilities. CPA Yoram Shifer outlines essential steps to take before December 31.
Self-Employed and Licensed Dealers
Self-employed workers can deposit up to 38,412 NIS into pension funds to achieve tax savings of up to 16,000 NIS. Up to 11% of qualifying income is recognized as a deduction, with an additional 5.5% offering a 35% tax credit. Profitable businesses should consider accelerating routine expenses into December to reduce taxable income, particularly for those operating on a cash basis. Conversely, businesses facing a tax bracket threshold can defer invoicing to January to avoid higher rates. Additionally, paying National Insurance debts before December 31 is crucial, as 52% of these payments are tax-deductible only when actually paid within the tax year.
Employees and Bonus Pensions
Employees should check their pay slips to ensure pension contributions are being deducted from bonuses, commissions, and overtime pay, rather than base salary alone. Uninsured salary components can be supplemented by individual deposits up to 16%, yielding a tax refund of approximately 35%. Furthermore, reserve soldiers who served at least 30 days are entitled to up to 4,166 NIS in tax credit points. Employees who changed jobs, experienced periods of unemployment, or graduated are also encouraged to check eligibility for retroactive tax refunds over the past six years via the Tax Authority portal.
General Strategies for All Taxpayers
Charitable donations made to public institutions approved under Section 46 qualify for a 35% tax credit, provided donations exceed 207 NIS annually. Starting January 1, 2026, all donations must be reported through the Tax Authority's digital system. Moreover, returning residents arriving between November 2025 and December 2026 can benefit from temporary tax exemptions on domestic earned income up to 3.1 million NIS through 2030, though documentation from the Ministry of Aliyah and Integration is required. Taking proactive steps now prevents last-minute administrative hurdles and ensures financial optimization.
