Teachers

Teachers in Israel who stop working to take a sabbatical year receive a grant from the teachers’ education fund (keren hishtalmut). (This income is not considered “employment income,” and therefore is not subject to income tax.)

According to the law, tax which a salaried employee must pay is calculated on an annual basis according to their anticipated average monthly salary for that tax year. In other words, in order to understand how much tax an employee must pay for a particular tax year, it’s necessary to know the precise amount that person will earn throughout the various months of that tax year. The process of calculating taxes owing is such that tax is withheld from salary on a monthly basis according to relative calculations, and therefore, it is charged based on the assumption that the individual will continue earning the same regular monthly salary throughout the entire year.

In situations where a salaried employee has an income which changes or who does not work in some months out of the year, a higher amount than required is taken out during the months when the individual is working or for months in which they earn a higher than usual salary, since their average annual salary for that year will be lower than that which was expected when the tax amount was calculated.

Following are a few reasons for which it’s possible that you, as a teacher, could be owed a tax refund.

Remember that you can request a tax refund for up to 6 y ears retroactively (as of 2021, you can request a tax refund for the years 2015-2020). To request a tax refund, you need to file a tax return for the applicable year.

1. Sabbatical leave
Sabbatical leave for teachers takes place in parallel with the school year, which begins in September and continues until the following August, so that a teacher is employed for only 10 months in year they start their sabbatical leave, and the following year, for only 3 or 4 months. In this situation, there is a situation of two consecutive tax years without a full income for the year. As mentioned above, this reason will definitely create an entitlement to a tax refund since you haven’t worked the full year in either of these two years. The result is that excess tax was probably withheld from your salary which is due back to you as a tax refund.

For example, a teacher who took sabbatical leave in the 5776 / 2015-2016 school year is very likely entitled to a tax refund for both the tax year 2015 and the tax year 2016.

2. Education fund (keren hishtalmut) for the sabbatical year

When it comes to money received from the teachers’ education fund (keren hishtalmut), it should be noted that for a sabbatical year, money received from an education fund is not considered income for tax purposes and therefore need not be reported in the request for a tax refund.

3. New Horizon Reform

Wage instability could lead to a tax refund, and many teachers who have come under the New Horizon Reform program in recent years have benefited from increased salaries, which could lead to eligibility for a tax refund.

4. High-seniority teachers grant (מענק יובל / Ma’anak Yovel)

Most individuals are not entitled to grants such as Ma’anak Yovel, the annual grant for high-seniority teachers (since this is only awarded to those with 25 years’ experience). If you have received this type of grant in the last 6 years, it’s highly advisable to find out whether you are entitled to a tax refund.

5. Other reasons

There are many other reasons you may be entitled to a tax refund as a teacher, for instance, payments made for life insurance, donations, expenses for continuing professional education, purchase of books, and more.