The increase in National Insurance contributions has been finally approved in the Knesset: How much will it cost you?

January 14, 2025   

The Knesset plenum approved the National Insurance Bill on second and third readings this evening (Monday). 55 MKs supported the bill, compared to 46 who opposed it. According to the law, National Insurance contributions will increase by 1.6%, which is supposed to bring the state about 4.4 billion shekels to cover war expenses. Also, in 2025, the amount of the child allowance and payment for "savings for each child" will not be updated. In order to reduce the deficit in the state budget, the government decided on a series of decrees that will bring money into the state coffers. One of the decrees is an increase in National Insurance contributions in the monthly salary. In practice, National Insurance contributions will increase by 1.6%, divided into 0.8% for the employer and 0.8% for the employee. The practical meaning: an additional reduction in the paycheck of 60 shekels, with the employer adding 60 shekels of his own. However, after discussions in the Labor and Welfare Committee, an outline was agreed upon that would make it a little easier for those who earn up to the low salary bracket (7,522 shekels per month): They would only bear 40% of the increase, so that an employee whose monthly salary is lower than 7,522 shekels per month would pay an increase of 48 shekels, while the employer would bear a payment of 72 shekels. The chairman of the Labor and Welfare Committee, MK Israel Eichler, presented the proposal: "This bill is part of broad legislation intended to make up for the large deficits in the state budget created due to the war. Regarding child benefits, we insisted not on cutting them, but only on freezing the update according to the rate of increase in the index. While the bill submitted by the government proposed raising National Insurance contributions permanently, the Labor and Welfare Committee insisted that the provision be set as a temporary provision for only two years, which could be extended in 2027 and 2028.".