Dear Clients,

The tax coordination (Te’um Mas) system for 2026 is now open. You can perform the tax coordination independently by logging into the Online Tax Coordination System after identification.

Below are several key highlights and important updates on this matter:

What is Tax Coordination (Te’um Mas)?

Tax coordination is a proactive application to the Tax Authority requesting to determine the tax rate to be deducted at source from a specific income, based on expected total income and eligible credits.

We remind you that any individual who works for or receives a pension from more than one payer is required to perform a tax coordination between the payers and determine who will be considered the “primary employer.”

The primary employer applies the tax credit points to this income only, while for the secondary employer, the tax coordination determines the tax rate to be deducted based on total income and credit points.

How does it relate to Form 101?

At the beginning of each tax year, every employer or pension payer requires us to fill out Form 101, where we state our personal status and the tax benefits we wish to be considered during the tax calculation. After performing the tax coordination, Form 101 must be filled out for each payer, attaching the completed tax coordination certificates.

How is Tax Coordination performed?

After identification, you must upload the latest payslips from each payer, select the relevant tax benefits, and mark the primary employer. This is a simple and user-friendly process, and in most cases, the approvals are received promptly.

According to Income Tax directives, in most cases, tax coordinations performed in 2025 remain valid until the end of March 2026. If you have already filled out Form 101, you should attach the tax coordination to the payer afterward.

Online Tax Coordination System

In more complex cases involving special income and/or unique exemptions, you may contact us for individual assistance.

What is the connection between tax coordination, pension income, and kibuah zechuyot

For a retiree who has performed kibuah zechuyot (קיבוע זכויות ) pension exemption will be automatically reflected in the tax coordination. Most retirees who performed kibuah zechuyot (קיבוע זכויות) received a notice that the exemption increased in 2026; no action is required in this context beyond the tax coordination itself.

A pension recipient who has passed retirement age and has not performed kibuah zechuyot (קיבוע זכויות) will generally not be able to perform tax coordination until they complete the kibuah zechuyot (קיבוע זכויות) – it is recommended to contact us for further details in this case.

What is kibuah zechuyot (קיבוע זכויות)?

kibuah zechuyot (קיבוע זכויות) is relevant for an individual receiving a pension who has reached retirement age. It is a one-time application to the Tax Authority to receive a significant exemption on the monthly pension and to withdraw accumulated funds from pension funds tax-free.

The total exemption of kibuah zechuyot stands at approximately 1 million ILS, and the cumulative tax benefit over a lifetime can reach hundreds of thousands of shekels.

Correct kibuah zechuyot requires planning and adjustment to the retiree’s personal preferences – therefore, it is recommended to contact us for a consultation on the matter.

American citizens interested in performing kibuah zechuyot (קיבוע זכויות) must take into account the U.S. tax implications of this action – it is recommended to contact us for assistance.

Sometimes, after kibuah zechuyot, one can apply to the Tax Authority for tax refunds.

What should I do with the approvals I received in the mail regarding tax coordination?

According to Income Tax directives, in most cases, tax coordinations performed in 2025 are valid until the end of March 2026. However, it is recommended to perform a new tax coordination at the start of the year and attach it to Form 101.

People who have previously performed kibuah zechuyot (קיבוע זכויות) often received a notice that their exemption has increased. This notice can be ignored; it will be automatically reflected in the tax coordination.

What is the difference between Tax Coordination and a Tax Refund?

• Tax coordination refers to the current year, and its output is certificates to be transferred to employers/pension payers.
•  A tax refund application refers to previous years and is an annual report that includes all income, deductions, and credits due for the purpose of receiving

a tax refund.

If you have any question you can please contact us at: elad@hb-cpa.co.il