New tax credit for returning residents

The new proposals regarding credit points have just been enacted. In 2011 each credit point will reduce the tax bill by 209 nis  per month. In the case of a married working couple, the husband will usually receive 2.25 credit points and the wife, 2.75 points.

However, olim will receive more tax credits in their first 3.5 years in Israel: three more credit points for 18 months, followed by two more credit points for 12 months, followed by one extra credit point for the following 12 months.

Until the recent changes were implemented, the extra credit points only applied to a new immigrant with  a Teudat Oleh (immigration certificate) under the Law of Return, or for someone eligible with a temporary resident’s visa.

Now “returning residents” will also get the extra credit points according to Amendment 181 to the Income Tax Ordinance which began on January 1, 2011. This applies to Israeli citizens returning to reside in Israel between May 16, 2010, and September 30, 2012, after living abroad six, continueous years.

Returning residents will require a Returning Resident Certificate from the Immigration Absorption Ministry.

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