Deductions and Credits Deductions – recognized expenses that diminish revenue. for

example, rent of a business or employee salaries.

Credits – sums that are deducted from the tax and provided

as credit points. for example, every Israeli citizen is entitled to 2 credit points and 1/4 credit point for transportation (to work), and working women are entitled to an additional 1/2 credit point.

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Taxes – Terms

Examples of credits:

2

Single parent

families

Working

mothers

New immigrants

Discharged soldiers

Credit points

Taxes – Terms

Tax Year

The period for which the liable income and the tax due for it are calculated is a calendar year beginning on January 1 and ending on December 31 of each year.

A tax adjustment is required because tax calculation is made in annual terms.

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Taxes – Terms

Marginal Tax and Tax Brackets Marginal Tax and Tax Brackets Division of income into classes.Division of income into classes.Each class is called a Tax Bracket.Each class is called a Tax Bracket.Each tax bracket is liable for a different tax rate. Each tax bracket is liable for a different tax rate.

the higher the bracket, the higher its tax rate is - the higher the bracket, the higher its tax rate is - Progressive.Progressive.

When talking about the marginal tax rate, we're When talking about the marginal tax rate, we're referring to the tax rate in the highest bracket.referring to the tax rate in the highest bracket.

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Taxes – Terms