Calculation Method
The benefit value of an employer-provided car is calculated as a fixed percentage of the vehicle's catalog list price (manufacturer's suggested retail price at time of first registration). For 2026, the rate is approximately 2.48% per month. This value is added to the employee's taxable income regardless of actual personal use.
Example
Car list price: ₪250,000
Monthly benefit: ₪250,000 × 2.48% = ₪6,200
Annual addition to taxable income: ₪74,400
At 47% marginal rate: additional tax of ₪34,968/year = ₪2,914/month
For an electric vehicle (reduced coefficient): ~30% less = ₪2,040/month in tax.
Planning Tips
- Consider electric vehicles for reduced benefit-in-kind rates
- Lower-priced vehicles result in lower taxable benefits
- If you don't need a car for work, a transport allowance may be more tax-efficient
- The benefit applies 7 days a week, 365 days a year – even during vacations
- Returning the car to the employer during extended leave does not reduce the benefit
בסיס חוקי
- Income Tax Regulations – Vehicle benefit calculation
Important Note: The information on this website is for general informational purposes only and does not constitute professional tax advice. Consult a qualified tax advisor before making financial decisions.