An employee paying for a parent or spouse to live in an institution is entitled to an income tax credit
The credit is a deduction from the portion of income tax the employee is obligated to pay
The request for the credit should be submitted one a year
The credit is equal to 35% of the difference between the amount paid for the spouse/parent to live in the institution, and the obligatory 12.5% of income paid by the applicant.
For more information, see the Tax Breaks for Salaried Employees - Refund for Costs of an Institutionalized Family Member on the Tax Authority website.
If the spouse or parent of an employee is resides in a special institution, the employee is entitled to a tax reduction. The credit is a deduction from the portion of income tax the employee is obligated to pay based on his income
- The credit is equal to 35% of the difference between the amount paid for the spouse/parent to live in the institution, and the obligatory 12.5% of income paid by the applicant.
- An employee pays 60,000 NIS for his father to live in an institution.
- His taxable income is 160,000 NIS for that income tax year.
- 12.5% of his income is 20,000 NIS (160,000 X 12.5%).
- The deduction amount the employee will receive for paying for his father to reside in an institution is
Who is Eligible?
- Those who have a spouse or parent who is completely paralyzed, permanently bedridden, blind, or not of sound mind.
- The credit is conditional on the income of the individual in the institution not exceeding 167,00 NIS as of 2017, and the combined income of the individual and his/her spouse not exceeding 268,000 NIS (correct as of 2018).
How to Claim It?
- Those wanting to request a tax credit must contact the Tax Authority offices in their area Click here and submit the following documents:
- Form 127 - Medical documentation that must include medical details and a clear and precise diagnosis in Hebrew, as well as indicate from which date the diagnosis is valid. The form must be filled out by a medical specialist (neurologist, developmental specialists, psychiatrist).
- Form 116a - Request for Tax Credit due to a Disabled Family Member (for salaried employees).
- Original invoices from the institution where the relative resides.
- Information verifying that the person who is paying for the institution is the same person who is claiming this right.
- Those who are self-employed must fill out the section about personal refunds due to supporting an institutionalized family member on form 1301 (in their year end report and attach it to the rest of the documentation.
- The income tax credit request must be submitted every year.
- If the tax year has passed, the employee can submit an income tax return form to his local tax assessor office. One is able to relieve tax refunds retroactively for up to 6 years.
- Click here for a comprehensive listing of organizations that provide assistance for issues related to employment and workers' rights
Laws and Regulations
- Income Tax Ordinance - Section 44
- 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)
- Tax Relief for Salaried Employees - The Tax Authority
- Original translation by AACI's Shira Pransky Project.