Getting Ready for Tax Year-End: What to Check Before December 31
Israel's tax year follows the calendar year, so December 31 is the deadline for most of the steps that can still lower this year's tax bill. As the year draws to a close, it's the right time for some financial planning. Here are the key points worth checking:
Review your books
Make sure everything has been recorded properly. Now is the time to check in with your accountant and confirm that your books are complete and accurate.
Tax advance payments (mikdamot)
If your profits are up this year, check whether the advance payments you've made so far actually cover your expected tax liability. If needed, you can pay the expected shortfall ahead of time.
Consider additional expenses
Bringing forward relevant business expenses before year-end may reduce your tax liability. Keep in mind that investments in fixed assets, such as equipment, are depreciated over several years rather than deducted all at once.
Donations and receipts
Donations to a nonprofit approved under Section 46 qualify for a tax credit. If you donated during the year, make sure you have all your receipts. If you gave to organizations that operate both in Israel and abroad, make sure you hold an Israeli receipt with Section 46 approval.
When giving to an individual in need, you can route the donation through a recognized nonprofit so that you receive a qualifying receipt.
Keren hishtalmut for the self-employed
A keren hishtalmut (study fund) is a unique savings vehicle: gains are exempt from capital gains tax when you withdraw. In 2026, self-employed individuals can deposit up to NIS 20,566 and enjoy the capital gains exemption, plus a tax deduction on deposits of up to 4.5% of taxable income (up to NIS 13,203 a year).
Pension contributions
Israel encourages the self-employed to save for retirement, with tax benefits that can exceed 30% of the amount deposited. If your income is above the national average wage, it's worth increasing your contribution to make the most of these benefits.
Offsetting losses
If you have capital losses from this year or previous years, consider selling assets that are showing a gain, so the gains are offset against the losses and you save tax. Conversely, if you realized a capital gain earlier in the year and are now holding investments at a loss, it may be worth selling them before year-end.
The bottom line
Planning early and properly helps you make full use of the tax benefits available to you and close the year in the best possible shape. I'm happy to help with any question.