6/2024
Big news! An Israeli tax law has been proposed to address the issue of double social security taxation for US citizens living in Israel.
If the law gets passed, a US citizen will only have to pay social security tax (also known as self employment tax) to the US if they work as a self employed individual.
Though they will still have to pay Israeli Healthcare tax (similar to Medicare tax for self employed individuals in the US).
This would apply to those being paid through a 1099-NEC from a US company, or otherwise doing freelance work for a US company.
However, a big letdown is that the proposed law would not allow this exemption for those whose self employment source of income is in Israel, or for a US company who specifically needs work done in Israel.
In any case, this proposed law would be a unique solution to a large part of the double taxation problem.
It would circumvent the fact that there is no totalization agreement (agreement to be taxed for social security only in the country of residence) in the old Israeli tax treaty with the US.
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