Israel Section 3(i) Stock Options Calculator
Israeli Section 3(i) capital gains route: 25% tax on full grant value at sale if held in trust by approved trustee for min 24 months from grant date. Without trustee or short hold: ordinary income tax (up to 50%). Most Israeli tech employees use 3(i) for tax efficiency.
Section 3(i) Capital Gains Route
Default for Israeli employee stock options. 25% tax on full gain at sale (NO ordinary income on exercise). Requires approved trustee + 24-month hold from grant.
Section 3(i)(9) Ordinary Route
Alternative — ordinary income tax on full gain at sale + 5% surtax for high earners. Used when capital gains route unavailable.
Non-Trustee Route
If options not held by approved trustee: marginal income tax on full gain. Avoided by sophisticated grants — but startup founders sometimes accept this.
Source and Disclaimer
Income Tax Ordinance Israel Section 3(i). Tax planning critical — early disposal voids 3(i) benefit. Consult Israeli tax advisor.
Source: Israel Income Tax Ordinance Section 3(i). Last updated: May 2026.