Upon retiring or leaving an employer, severance payouts and retirement grants are subject to income tax above statutory tax exemption ceilings.

Exemption Cap & Tax Spreading (Priasat Mas):

Severance pay is tax-exempt up to one month's salary per year of service, capped at statutory maximum limit (approx 13,750 ILS per work year).

For taxable grant balances, taxpayers can execute Tax Spreading (Priasat Mas) forward for up to 6 tax years or backward across 4 tax years to dramatically lower marginal tax rates.

Bernstein & Co. assists retirees in executing optimal severance tax planning to preserve retirement funds.