According to Section 45 of the Income Tax Ordinance, a parent (or the spouse of a parent) whose child is defined as "disabled" (נטול יכולת in Hebrew) is eligible to receive two yearly income tax credit points.
- The value of the benefit is 5,160 NIS per year and 430 NIS per month.
- If there are expenses for a child living outside the home, the parents may choose between receiving the two tax credit points and income tax credit for a child in housing outside the home.
Who is eligible?
- Israeli residents who work and whose child or spouse's child has a disability.
- The conditions of eligibility vary depending on the child's age (whether the child is under or over the age of 18).
Children under the age of 18
- The entitlement is given for children under 18 who fulfill one of the following criteria:
- Paralyzed - Children who have been diagnosed by a neurologist or doctor specializing in child development as paralyzed in one of their limbs, or for whom a doctor has indicated that they were born without a limb or had a limb amputated.
- Blind - Children who have been diagnosed as being blind by an ophthalmologist.
- Intellectual developmental disabilities - Children who have been diagnosed as such by a neurologist or doctor specializing in child development.
- A child with developmental delay due to a severe learning disability and referred by a placement committee to a special education framework. (It is not necessary to show that the child is actually enrolled in a special education program rather the notification letter to the parents from the placement committee is necessary. See an example. For more information see Income tax credits for a child with a learning disability.
- A child with a developmental delay, receiving Disabled Child Benefit recipients, or those eligible to receive the benefit but do not for various reasons (such as living in an institution or receiving another benefit, such as a Mobility Benefit).
Adults over the age of 18
- The entitlement is given for adults over the age of 18 who fulfill one of the following criteria:
- Those referred by a placement committee to one of the special education frameworks detailed above for children under the age of 18. Eligibility is until completion of high school studies.
- Those for whom the permanent degree of earning incapacity is at least 74%.
- Those who meet all 3 of the following conditions:
- They are completely dependent on their parents.
- Even those living in an institution outside their parents home can be considered "completely dependent".
- A "disabled" adult who has married another "disabled" individual and is still dependent on his/her parents may still be considered as "completely dependent" according to the assessment officer's discretion and in accordance with the specific circumstances.
- Income test - They and their spouse (if applicable) must meet the income test requirements.
- Married adults - Their taxable income and their spouse's taxable income may not exceed 267,000 NIS per year as of January 2017 (previously, 268,000 NIS in 2016, 270,000 NIS in 2014 - 2015).
- Single adults - Their taxable income may not exceed 167,000 NIS per year as of January 2016, and is accurate also for 2017 (previously 169,00 NIS for 2014-2015).
- Tax-exempt income is also included for purposes of calculating income test requirements.
- Those who are one of the following:
- Paralyzed - Those who have been diagnosed by a neurologist as paralyzed in one of their limbs, or for whom a doctor has indicated that they were born without a limb or had a limb amputated.
- Blind - Certificate of Blindness/Visual Impairment holders.
- Have intellectual developmental disabilities - They have been diagnosed as such by an intellectual developmental disabilities diagnosis committee.
- They are completely dependent on their parents.
Eligibility of siblings who are legal guardians
- Siblings who have been appointed to be the legal guardian over that person's body and property for someone with disabilities are entitled to the income tax credit points if their parents are no longer living or not functioning due to age or medical condition.
How to claim it?
Parents whose child receives a Disabled Child Benefit
- Beginning in November 2017, parents who have a child that receives a Disabled Child Benefit can receive his/her tax credit points directly from his/her employer without going to the income tax authority office and without having to submit a medical certificate (form 127).
- In order to claim the right the parent has to indicate and attest on form 101 that is submitted to his/her employer at the beginning of each year (in the section where one requests a tax exemption or deduction) that:
- He/she is a parent of a disabled child under the age of 19 and is paid a disabled child benefit by the National Insurance Institute.
- His/her spouse does not receive these tax credits.
- The child for whom the tax credits is on behalf, has had no income that year.
- A certificate showing reciept of the disabled child benefit from the National Insurance Institue must be submitted with the form. This certificate can be requested through the call center - *6050.
- For more information see the [https://taxes.gov.il/About/SpokesmanAnnouncements/Pages/Ann_191117_1.aspx
Notification from the Tax Authority from 19.11.2017].
A Parent whose child does not receive a disabled child benefit
- Contact the tax assessor's office in your area of residence and submit Form 116a - Request for Tax Credit Due to a Disabled Family Member.
- The following documents must be attached, according to the circumstances:
- If a medical diagnosis is required, Form 127 - "Medical Certificate" filled out by the specialty doctor must be attached. The form must include medical information, a clear diagnosis and a date from which the diagnosis is valid.
- For a child referred for special education because of a severe learning disability, the notification sent to the parents regarding the placement committee decision to refer the child to special education (see sample notification) mjust be submitted. Documentation that the child actually learns in that special education framework is not necessary.
- For adult General Disability Pension recipients - Documentation from the National Insurance Institute indicating the rate of incapacity (74% and higher) and entitlement to the pension (Form 3286 - Section A). This documentation may be requested by calling the call center: *6050, and it will be sent by mail.
- For blind adults - Certificate of Blindness/Visual Impairment
- For adults with intellectual developmental disabilities - A copy of the intellectual developmental disabilities diagnosis committee decision.
- For adults who are paralyzed/blind/have intellectual developmental disabilities (if they are not in the special education system or receive a General Disability Pension) - Declaration from the income tax credit applicant that the individual with a disability is completely dependent, as well as documentation indicating the individual with disabilities' source and amount of income for him/herself and his/her spouse (if applicable).
- The assessing officer may require additional documentation if they find it necessary in order to examine the entitlement.
- The assessor's office will give the parents approval for an income tax deduction, which they must give to their employer.
- Tax credit points for a disabled child or adult are given in addition to the 2.25 credit points granted to an employee for being an Israeli resident.
- Parents of two children who meet these conditions are eligible to receive double points (meaning 4 credit points total).
- The credit is valid for one parent’s salary. If only one parent has custody over the child, that parent may request that the tax credit points only be given to him/her.
- A new request must be submitted every year.
- Parents are entitled to receive tax refunds for the six years prior to the date such a request was submitted (so long as the entitlement existed during those years), with the addition of interest and indexation as is customary for income tax calculations. To receive the refund, submit a tax return request to the tax authority. For more information, see Income Tax Return.
- If the employee meets criteria entitling additional income tax credit points, he may receive the aggregate of all the credits, in accordance with each criterion (unless otherwise stated). For details on these entitlements, see the portal page Income Tax Credit Points.
Laws & Regulations
- Tax Ordinance - Section 45
- Income Tax Regulations (Credit for a Disabled Individual and Credit for Expenses of Keeping a Relative in an Institution), 5756-1996 (on the Nevo website)
- Israel Tax Authority Income Tax Implementation Order 10/2012 - Entitlement to Income Tax Credit Points Pursuant to Section 45 of the Income Tax Ordinance
- Tax Credit Calculator through 31.12.2016 - Tax Authority website.
- Tax Credit Calculator for 2017-2018 - Tax Authority website.
- Tax Breaks for Employees - Tax Authority Website.
- Chart to help calculate income tax based on salary for January 2017 and onwards - Tax Authority website.
- Know Your Rights and Obligations packet - Tax Authority website.
- Tax Portal (for non-profits) - "Civil Leadership" website.
- Original translation performed by The Shira Pransky Project as part of a grant from The Fellowship Fund.