Termination

When employment ends in Israel — whether through termination, resignation, or retirement — several tax issues arise. This section covers the tax treatment of severance pay, unused vacation payout, advance notice pay, non-compete compensation, pension fund withdrawals upon termination, and the process for receiving your final tax reconciliation from your employer.

  1. Dismissal – Tax Treatment of Severance Pay

    Comprehensive guide to the tax treatment of severance pay in Israel, including the exemption, spreading options, and Form 161

  2. Resignation – Tax Implications

    When resignation qualifies for severance pay and how the tax treatment differs from dismissal

  3. Retirement Grant Taxation

    Tax treatment of retirement grants and bonuses paid beyond statutory severance

  4. Vacation Day Redemption – Tax Treatment

    Taxation of unused vacation days paid out upon termination

  5. Form 161 – End of Employment Tax Forms

    How to properly complete Forms 161 and 161A when employment ends in Israel