How much of your expenses are deductible?

Why a percentage and not the full amount

An expense is recognized only to the extent it served the business. A car that drives to work and on holiday is recognized at 45 percent, a phone and internet line the family also uses at 80 percent, and software that exists purely for the work at 100 percent. The percentage is a fixed rule rather than your accountant's estimate, which is why there is nothing to negotiate with the assessing officer about.

Two categories sit at zero: client hosting and gifts. An expense there can be entirely sensible commercially and still not be deductible, which is the difference between a business expense and a recognized one.

Two more show here at 100% but are capped by regulation as well as by percentage: travel abroad, which carries daily ceilings for lodging and subsistence and a limit on cabin class, and lodging inside Israel, which is recognized only in specific circumstances. For both, the figure this calculator returns is an upper bound, and the actual deduction is settled with your accountant against that year's ceilings.

Input VAT is a separate calculation

The income tax percentage and the input VAT percentage are not the same number and neither follows from the other. An osek patur deducts no input VAT at all, even on an expense fully recognized against income tax. An osek murshe does deduct it, in some categories at a rate different from the recognition percentage. That side is covered in the input VAT guide.

What no percentage can rescue

An expense without a tax invoice in the business name is not deductible, however business-like it was. Cash paid with no document, a receipt in a personal name, a blurred photo deleted off the phone: the business paid and gets nothing back for it. Keeping the document is the precondition, and only then do the percentages here mean anything.