Israel Severance Pay Calculator (Pitzuim)
Estimate the severance pay you're owed when leaving an Israeli job, based on your final salary, tenure (entered directly or derived from your start and end dates), unpaid leave, any enhanced-severance offer, and a Section 14 pension arrangement — including the tax-exempt / taxable split.
Under Israel's Severance Pay Law, 1963, employees who are dismissed after at least one full year with the same employer are entitled to severance pay (pitzuim) — broadly, one month's salary for every year worked, with partial years prorated. It's designed as a safety net while you look for your next job, and it applies to full-time, part-time, and hourly employees alike.
Many employers fund this obligation continuously rather than paying a lump sum at the end: under Section 14 of the law, monthly contributions of around 8.33% of salary into your pension fund can fully satisfy the severance requirement. If Section 14 applies to your employment, whatever has accumulated in that pension component is your severance — no separate payment is due from your employer, even if your salary has since increased. If Section 14 doesn't apply, your employer typically owes the difference between what's accrued in the pension fund and the full amount calculated from your final salary and tenure.
Enter your last monthly salary, your years and months of tenure, and whether Section 14 applies (and at what percentage) to see a full breakdown of what you're owed.
Unpaid leave (chalat) beyond 14 days per year does not count toward severance tenure. Enter the number of months to exclude.
100% = the statutory amount. If your employer offered enhanced severance (e.g. 150% or 200%), update it here.
Employer contributed severance pay into the pension fund
Full Section 14 = 100% | Partial Section 14 = less than 100%
Calculation results
Enter a start and end date to calculate your tenure, or switch to manual entry of years and months.
Guide & more information
How severance is calculated: two worked examples
The base formula is simple: final monthly salary × years of service, with partial years prorated by month.
- Example 1 — no Section 14: ₪12,000 final salary, 4 years and 6 months of service → 12,000 × 4.5 = ₪54,000. Whatever severance money already sits in the pension fund is deducted, and the employer pays the rest.
- Example 2 — full Section 14: same employee, but the employer deposited 8.33% of salary into the pension's severance component every month. The accumulated deposits (plus market returns) are the severance — no top-up is due, even though the salary grew over the years. In exchange, the money is yours even if you resign.
Tax on severance pay in 2026
Severance is tax-exempt up to a cap of ₪13,750 per year of service(2026 figure). In Example 1 above, the exemption cap is 13,750 × 4.5 = ₪61,875 — higher than the ₪54,000 received, so the entire amount is tax-free. Anything above the cap is taxed as income, but two tools soften the hit:
- Spreading (prisa): the taxable part can be spread across up to six tax years, keeping it in lower brackets.
- Rollover (retzef zchuyot): leaving the money inside the pension fund for retirement instead of withdrawing it defers (and often eliminates) the tax.
Withdrawing the severance component in cash also permanently reduces your future pension — for many people leaving it invested is the better move. For large amounts, a one-time consultation with a tax advisor usually pays for itself.
Resigned? You may still be entitled
Dismissal isn't the only trigger. Israeli law treats certain resignations as dismissal for severance purposes ("hitpatrut be-din mefutar"), including resigning due to a serious worsening of employment terms, relocating after marriage or to a development area, health reasons (yours or a family member's), or to care for a newborn. And with a full Section 14 arrangement, the accumulated severance component belongs to you regardless of how the employment ended.
Frequently Asked Questions
What is severance pay (pitzuim) in Israel?
Severance pay (pitzuim) is a payment an employer is legally required to make when an employment relationship ends, under Israel's Severance Pay Law, 1963. It's meant to provide a financial cushion between jobs. The core entitlement is one month's salary for every full year of employment, with partial years calculated proportionally — so 6 months of additional tenure adds half a month's pay.
Who is entitled to severance pay?
Any employee who worked at least one continuous year for the same employer and is then dismissed is entitled to severance — including part-time and hourly employees. In certain cases, employees who resign are also entitled to full severance: for example, resigning due to a significant deterioration in working conditions, within nine months of childbirth or adoption, following a substantial relocation, or for documented health reasons. Seasonal workers can qualify after two seasons across two consecutive years.
How is severance pay calculated?
The basic formula is: final monthly salary × years of employment. For example, an employee earning ₪10,000/month with 3 years of tenure is owed ₪30,000 (3 × ₪10,000). Partial months are prorated — 6 months counts as half a month's salary. The relevant salary is your last one, including fixed add-ons like seniority or family allowances, but excluding overtime or one-off bonuses.
What is Section 14, and why does it matter?
Section 14 of the Severance Pay Law lets an employer fully discharge their severance obligation through ongoing monthly contributions into your pension fund — typically 8.33% of salary (or 6% under some collective agreements). When Section 14 applies, you're simply entitled to whatever has accumulated in that pension component when you leave, and the employer owes nothing further, even if your final salary was higher than in earlier years. It's worth checking your payslip and employment contract to see whether Section 14 applies to you.
When must severance pay be paid?
Severance is due on your last day of work, or by the standard payday for your final month's salary — whichever is later. A delay of more than 15 days can trigger "severance delay compensation" (pitzuei halanat pitzuim), which can add up quickly through steep statutory interest and penalties. Your employer must also provide Form 161 and a release authorization for any pension funds within a reasonable time.
Is severance pay taxed?
Severance pay is exempt from income tax up to a cap of about ₪13,750 per year of employment (2026 figures). Any amount above that cap is taxed as regular income, though you may be able to spread the taxable portion over up to six tax years to reduce the overall tax burden. Speak with a tax advisor if your severance payout is likely to exceed the exempt ceiling.
This calculator is for estimation purposes only and does not constitute legal, accounting, or financial advice. For accurate figures specific to your situation, please consult a licensed accountant or tax advisor.