Who is considered a salaried employee under National Insurance?

There are two main criteria: anyone in an employer-employee relationship with their employer, and anyone who meets the tests under the insured-classification and employer-determination order.

Does a salaried employeepay National Insurance?How much comes out of the payslip, why, and how it is calculated

Q: How does a freelancer without a tax file pay National Insurance through NETO?

Anyone working through NETO · a licensed manpower contractor (license 1565) operated by Bareket IT Ltd · receives payment on a proper payslip, so National Insurance and health contributions are deducted at source from the payslip, exactly as for a salaried employee, without opening a tax file. NETO's fee is 5% taken from the client's pre-VAT invoice · the worker never pays it.

A guide for salaried workers, freelancers and second earners · how much National Insurance and health contribution comes out of each payslip, who counts as salaried under the National Insurance Institute, the full rate brackets · and how, through NETO, even a freelancer without a tax file gets a payslip with everything already deducted lawfully.

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Manpower license 1565 Ministry of Labor oversight Bareket IT Ltd · Operating since 2016

Does a salaried employee pay National Insurance?

Yes. Every salaried employee in Israel pays National Insurance and health contributions from every payslip and on all income · large or small, sole or secondary. The deduction is taken at source from the gross wage: on income up to ILS 7,703 a reduced rate of 4.27% is deducted, and on every shekel above that the employee pays 12.17% (2026 figures).

This question is a little more involved, and on this page we answer it simply: what exactly comes out of the payslip and why, who even counts as a salaried worker in Israel under the National Insurance definitions, how it differs from a self-employed person · and what to do if you earn without a payslip at all. All rates follow the official National Insurance Institute figures and are marked with the year they refer to.

How much a salaried worker contributes
A worked calculation example
Who counts as a salaried employee
The salaried contribution brackets
Deduction and reporting · Form 102
The NETO model · a payslip with it built in
Regulations, orders and laws
Frequently asked questions

The rates

How much does a salaried worker set aside for National Insurance?

Two rates alone decide how much comes out of the payslip · according to the gross wage. The figures follow the National Insurance Institute, effective from 01.01.2026.

Reduced rate · up to ILS 7,703

4.27%

On income up to ILS 7,703 (60% of the average wage · 2026 figures) 4.27% is deducted from the employee toward National Insurance and health contributions. The employer adds 4.51% on top · a combined 8.78%.

Full rate · above ILS 7,703

12.17%

On every shekel above that the employee pays 12.17% of the gross wage, up to the maximum income liable for contributions (ILS 51,910 · 2026 figures).

The maximum income is updated each January in line with the rise in the index. The average wage used for the brackets is ILS 13,769 (2026). In addition to the employee's share, the employer also contributes a share of its own, as detailed in the National Insurance Institute tables.

A National Insurance calculation example for a salaried worker

Yossi earns a wage of ILS 10,000 · how much will he pay toward National Insurance and health contributions?

On the reduced part: ILS 7,703 × 4.27%ILS 328.92

The part above: 10,000 − 7,703 = ILS 2,297 × 12.17%ILS 279.54

In total Yossi pays toward National Insurance and health contributionsILS 608.46

The example is illustrative and rounded · it applies the 2026 employee rates to a gross wage of ILS 10,000. Exact figures depend on your personal details; the National Insurance Institute provides an official contribution calculator.

The definition

Who counts as a salaried employee under National Insurance?

Not everyone who is paid for work is automatically salaried. Under the National Insurance Institute definition there are two main criteria for being salaried:

1 · Employer-employee relationshipAnyone for whom an employer-employee relationship exists with their employer, assessed under the mixed test.

2 · Insured-classification orderAnyone who meets the tests under the insured-classification and employer-determination order.

And it applies to all incomeA portion of every gross income an Israeli resident earns is set aside as National Insurance and health contributions · even a small income, and even a second income.

A salaried worker in Israel · who counts as salaried under National Insurance

The full picture

The salaried contribution brackets

National Insurance and health contribution rates for salaried workers who are Israeli residents, aged 18 up to retirement age · as a percentage of the wage, effective from 01.01.2026.

1First bracket

From the first shekel up to 60% of the average wage · that is, ILS 7,703. On all income up to this ceiling, 4.27% is deducted from the employee toward National Insurance and health contributions. The employer also contributes 4.51% · a combined 8.78%.

2Second bracket

All income above ILS 7,703 and up to the maximum liable income · ILS 51,910. On income in this bracket, 12.17% is deducted from the employee toward National Insurance and health contributions.

3Above the ceiling

The maximum income liable for contributions is ILS 51,910. Beyond this ceiling, no further National Insurance and health contributions are deducted from the wage.

A self-employed person, by contrast, manages these payments themselves directly with the National Insurance Institute and pays across their own brackets according to income · see the full picture in self-employed vs salaried under National Insurance and in freelancer or self-employed.

Deduction & reporting

Who deducts and reports the contributions?

For a salaried employee, the whole process happens without them lifting a finger · the employer handles it on the payslip and in the report to the National Insurance Institute.

Deducted on the payslipNational Insurance and health contributions are deducted at source from the gross wage, before the money reaches the bank account.

Reported on Form 102The report to the National Insurance Institute is filed on Form 102 (reporting the employment of Israeli-resident workers), according to the worker types and columns in the form.

Worked two jobs?If you paid National Insurance twice, you may be due a refund · see tax coordination and National Insurance refunds.

National Insurance deducted on the payslip and reported on Form 102

Let National Insurance sort itself out · on the payslip

Work, issue a lawful invoice and get a proper payslip through a licensed manpower contractor (license 1565) · the deductions, reports and rights are handled for you as the law requires. NETO's fee is 5% taken from the client's pre-VAT invoice · you never pay it.

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Where NETO comes in

A payslip · with National Insurance already inside

For a salaried worker, National Insurance and health contributions are deducted at source from the payslip · they don't need to open a file, file reports or remember deadlines. A self-employed person, by contrast, manages these payments themselves with the National Insurance Institute.

This is exactly where the NETO model works: anyone working as a freelancer or on a side income through NETO receives payment on a proper payslip · so the lawful deductions, including National Insurance and health contributions, are handled at source just as for any salaried employee, without opening a tax file and without bookkeeping. You can get paid by invoice as a salaried worker or use the NETO freelance payroll solution, and see how an invoice compares with a payslip.

NETO's fee is a simple 5%, taken from the client's invoice before VAT · the worker never pays it. NETO is operated by Bareket IT Ltd (company no. 515486058), a licensed manpower contractor under license 1565 supervised by the Ministry of Labor · and it upholds every one of your employee rights and mandatory benefits.

Side income for salaried workers through NETO · a payslip with National Insurance deducted at source

Everything stated above is neither advice nor authoritative reference · it is advisable to consult a professional such as a payroll controller, tax advisor, or attorney specializing in labor law. You are also welcome to reach our support and customer service · +972-8-976-1874.

Go deeper

Regulations, orders and laws on NETO

On the NETO site you'll find a hub of further regulations, orders and laws · each link opens a full information page.

Self-employed vs salaried under National Insurance Employee and employer rights Mandatory benefits in Israel Employer-employee relationship The employee-vs-contractor test Wage Protection Law Tax coordination for employees Tax on a second income Income top-up for salaried employees How the primary employer is determined Manpower contractor license Salary payment by invoice

Frequently asked

Questions & answers · salaried and National Insurance

Does a salaried employee pay National Insurance?

Yes. Every salaried employee in Israel pays National Insurance and health contributions from every payslip and on all income · large or small, sole or secondary. The deduction is taken at source from the gross wage, before the money reaches the bank account.

How much National Insurance does a salaried employee pay?

Under the 2026 figures: on income up to ILS 7,703 (60% of the average wage) 4.27% is deducted from the employee toward National Insurance and health contributions, and on every shekel above that the employee pays 12.17% of the gross wage, up to the maximum liable income of ILS 51,910. The maximum income is updated each January in line with the index.

Who is considered salaried under National Insurance?

There are two main criteria: anyone for whom an employer-employee relationship exists with their employer, and anyone who meets the tests under the insured-classification and employer-determination order.

Do you pay National Insurance on a second income too?

Yes. A portion of every gross income earned by an Israeli resident is set aside as National Insurance and health contributions · even if it is a small or large income, and even if it is a sole income or a second income.

Who deducts and reports a salaried employee's contributions?

The deduction is made on the payslip, and the report to the National Insurance Institute is filed on Form 102 (reporting the employment of Israeli-resident workers), according to the worker types and columns in the form.

How does a freelancer without a tax file pay National Insurance through NETO?

Anyone working through NETO, a licensed manpower contractor (license 1565) operated by Bareket IT Ltd, receives payment on a proper payslip · so National Insurance and health contributions are deducted at source from the payslip, exactly as for a salaried employee, without opening a tax file. NETO's fee is 5% of the client's pre-VAT invoice · the worker never pays it.

Summary · a salaried employee pays National Insurance

Every salaried employee in Israel pays National Insurance and health contributions from every payslip and on all income. The deduction is taken at source from the gross wage across two rates (2026 figures): 4.27% up to ILS 7,703 and 12.17% above · and anyone working through NETO gets a payslip where everything is already deducted and reported lawfully.

Reduced rate 4.27% up to ILS 7,703 · full rate 12.17% above (2026 figures).
Example: a wage of ILS 10,000 · about ILS 608.46 toward National Insurance and health.
Salaried = employer-employee relationship or meeting the insured-classification order tests.
Paid on all income · small too, and a second income too.
Deducted on the payslip and reported on Form 102 · the employer handles it.
Through NETO (manpower license 1565) you get a payslip · National Insurance is deducted at source.

Work as a freelancer without the tax-file headache?

NETO lets you work and issue a lawful invoice · without opening a tax file and without the hassle with National Insurance, which is deducted at source on your payslip. Fast, free signup · NETO's fee is 5% from the client's pre-VAT invoice.

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