Taxable Income
Unused vacation days paid out upon termination are fully taxable as employment income. There is no exemption for vacation redemption. The payment is calculated based on the employee's daily salary rate multiplied by the number of unredeemed days. The employer withholds income tax and NI from the payment.
Sick Leave Redemption
Unlike vacation days, unused sick leave paid out upon retirement may qualify for a partial exemption. The exemption applies to payments that are part of a collective agreement or company policy for long-term employees. The exact exemption depends on the circumstances.
בסיס חוקי
- Annual Leave Law 5711-1951
- Section 2(2) – Employment income
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.