How many credit points do discharged soldiers receive?

Two annual credit points for 36 months from the discharge date. At 2026 rates that is approximately 5,640 ₪ per year, or 470 ₪ per month of reduced income tax.

How do I activate the credit?

By checking the discharged-soldier box on Form 101 (the new-employee declaration) and entering the discharge date. Once that field is filled, the payroll software applies the credit to your withholding automatically.

What if I forgot to check the box on Form 101?

File a corrected Form 101 with your employer to fix going forward, and file Form 135 with the Tax Authority to recover the credit for past years. The retroactive window is six years.

Does the credit apply to self-employed income?

Yes. For self-employed work the credit is applied at the annual filing through Form 1301, since Form 101 only applies to employed roles.

What about credits for completing a degree?

A separate benefit. The first-degree credit (bagrut akademit) and the second-degree credit run in the years following degree completion and do not interact with the discharged-soldier credit beyond stacking arithmetically.

Tax Credit Points for Discharged Soldiers

Q: Do combat soldiers receive a longer credit period?

Yes. Combat (lochem) and certain combat-support roles receive the credit for additional months beyond the standard 36. The exact extension depends on the service track.

Q: Does this credit stack with the reservist credit?

Yes. A discharged soldier called up for reserve duty within the first 36 months stacks the discharged-soldier credit with the reservist credit — both are applied in the same tax year.

The tax credit for discharged soldiers is the most valuable benefit you receive in the first three years out of uniform, and yet it is the one most frequently lost. Two annual credit points, applied for 36 months after discharge, are worth roughly 5,640 ₪ per year in 2026 — but only if the discharged-soldier box on Form 101 is ticked.

The two-point benefit

In 2026 a single annual tax credit point is worth approximately 2,820 ₪. The two extra points granted to discharged soldiers therefore reduce annual income tax by roughly 5,640 ₪, or 470 ₪ per month, for as long as the credit is active.

The credit runs for 36 months from the discharge date — three calendar years of meaningful tax relief. For a typical first job out of uniform paying 12,000–15,000 ₪/month, the two extra points are large enough to push the effective marginal rate down materially.

Extended credit for combat veterans

Combat soldiers (lochem) receive the credit for additional months beyond the standard 36, with the exact extension depending on service track. The mechanism is the same — the difference is the duration and, for some sub-tracks, an additional fractional point.

How to activate the credit

The activation point is Form 101 — the new-employee declaration filed at the start of every job and at the start of every tax year. Form 101 has a checkbox for "discharged soldier" (chayal meshuchrar) along with fields for the discharge date. Checking the box and entering the date is the entire activation. Skipping it means the payroll software does not know to apply the credit, and your monthly withholding reflects no benefit.

For self-employed work that does not involve Form 101, the credit is applied at the annual filing through Form 1301 or Form 135.

Verifying on Form 106

At year-end, Form 106 from the employer should show the credit under nekudot zikui or zikui chayal meshuchrar. If the line is missing — for example, because Form 101 was filed without the box ticked — the credit is recoverable retroactively.

The fix is a Form 135 reconciliation with the Tax Authority, attaching:

- Form 106 from the relevant year. - A copy of the discharge certificate (teudat shichrur) showing the discharge date. - The discharged-soldier card (teudat hayal meshuchrar) where available.

Six-year retroactive window

The standard six-year retroactive window applies. In 2026 that means soldiers discharged anywhere from 2020 through 2025 can still file claims for unclaimed credit-point benefits. For a discharge in 2022, three full tax years (2022, 2023 and 2024) might be recoverable at roughly 5,000 ₪ each — that is 15,000 ₪ on the table for a five-minute filing.

Common scenarios that lose the credit

Three patterns dominate the cases we see at Yesh Cash:

1. First job at a small employer, where Form 101 was filed without payroll guidance and the discharged-soldier box was missed. 2. Multiple part-time jobs, where Form 101 was filed correctly at the first but not at the second — the second job withheld at the full rate, and no one noticed until tax-year reconciliation. 3. Self-employed transition, where the soldier moved straight into freelance work and never had Form 101 to trigger the benefit; the credit then has to be reclaimed through the annual return.

All three scenarios are recoverable, but they require active filing rather than passive payroll application.

The interaction with other benefits

The credit stacks cleanly with the discharge deposit, education subsidies, and any reservist credits earned in the same period (yes — a discharged soldier called up to reserve duty in the first 36 months stacks the discharged-soldier credit with the reservist credit). It does not interact with the credit for an academic degree, which kicks in only after completion of a first or second degree.

Practical action this week

Check your most recent Form 101 (or Form 106 if you are between years). If the discharged-soldier credit is not active, file a corrected Form 101 with your employer immediately. If past years' Form 106 also missed the credit, file Form 135 with the Tax Authority — the retroactive refund typically lands within 90 days.

— Yesh Cash Editor