National Insurance for the Self-Employed in Israel
Bituach Leumi is the payment most freelancers in Israel budget for last and understand least. Here is exactly what you owe in 2026, when you owe it, and the deduction that quietly gives a chunk of it back.
The 2026 rates
A self-employed person pays a combined National Insurance + health-insurance rate on net profit — revenue minus recognised expenses, not revenue. The rate steps up once, and stops entirely at the ceiling.
| Monthly net profit | Combined rate |
|---|---|
| Up to ₪7,703 | 5.97% |
| ₪7,703 – ₪51,910 | 17.83% |
| Above ₪51,910 | nothing further |
The reduced bracket is defined in law as 60% of the national average wage, so both figures move each year. The rate is progressive per bracket — you never pay the higher rate on your whole profit.
What that means in shekels
| Monthly net profit | Per month | Per year |
|---|---|---|
| ₪8,000 | ₪513 | ₪6,154 |
| ₪15,000 | ₪1,761 | ₪21,131 |
| ₪25,000 | ₪3,544 | ₪42,527 |
| ₪60,000 | ₪8,342 | ₪100,104 |
💰 The deduction most freelancers miss
52% of the National Insurance portion you pay is deductible against your taxable income. On a profit of ₪25,000 a month that is a meaningful four-figure reduction in your annual tax bill — and it is claimed in the annual return, which is precisely why people who file in a hurry never see it. The health-insurance portion is not deductible.
How and when you pay
You do not pay this at the end of the year. Bituach Leumi sets advance instalments based on your last reported income, and reconciles them against your real profit once the annual return is filed.
That creates the two classic failure modes. If your income grew and you never updated the rate, the reconciliation lands as a single large debt with interest and indexation. If your income fell and you never updated it, you financed the state all year with cash your business needed — and you only get it back months later.
Either way the fix is the same and it is free: file to adjust the advance rate as soon as your income changes materially, rather than at the end of the year.
What you are actually buying
- • Work-injury cover — for a self-employed person with no employer behind them, this is the one that matters most.
- • Maternity / paternity allowance — payable to the self-employed, and conditional on your payments being current.
- • Disability and long-term care.
- • Reserve-duty compensation (miluim).
- • The old-age pension, which accrues on your contribution record.
Entitlement depends on contributions being continuous. A lapse discovered at claim time — after an accident, or the week a baby arrives — is the expensive way to learn this.
Frequently asked
Do I have to pay National Insurance if my business made no profit?+
Yes. A registered self-employed person pays a minimum contribution even in a loss-making or zero-income month, because Bituach Leumi coverage (work-injury, maternity, disability) has to be continuous to be valid. If your income genuinely dropped, file to reduce your advance payments rather than simply stopping them — gaps in payment can invalidate a claim exactly when you need it.
Is National Insurance deductible against income tax?+
Partly. 52% of the National Insurance component you pay is a recognised deduction against your taxable income. The health-insurance component is not deductible. This is one of the most commonly missed deductions among Israeli freelancers, and it is applied in the annual return.
What happens if I earn above the ceiling?+
Nothing further is charged. Monthly profit above ₪51,910 is not liable for National Insurance or health insurance at all — the contribution simply stops climbing at that point.
I am also employed. Do I pay twice?+
You pay on both income streams, but not twice on the same shekel and never above the single combined ceiling. Your employer already deducts on your salary; your self-employed profit is assessed separately. If the combination pushed you over the ceiling during the year, you can reclaim the excess.
When do I actually pay?+
In advance instalments through the year, set by Bituach Leumi from your last reported income, and then reconciled against your actual profit after the annual return. If your income has changed materially, updating the advance rate mid-year prevents both a cash-flow drain and a surprise debt.
What do I actually get for it?+
Maternity/paternity allowance, work-injury cover, disability, bankruptcy protection of wages, reserve-duty compensation and the old-age pension. For a self-employed person the work-injury and maternity cover in particular is the practical reason the payments must not lapse.
Want someone to check your numbers?
We work with self-employed people and small businesses across Israel — in English. If your advance payments look wrong, or you have never claimed the deduction above, a short call usually settles it.
Free consultationThis guide is general information for 2026, not personal tax advice. Rates and thresholds are updated by Bituach Leumi periodically; your own liability depends on your full circumstances.