Israel Keren Hishtalmut Calculator: Study Fund Growth
Estimate what an Israeli keren hishtalmut (study/training fund) grows to from regular monthly contributions — a medium-term savings vehicle prized for combining employer matching, a tax-deductible/exempt contribution, and tax-free growth on withdrawal.
Adjust the inputs and select Calculate for a full breakdown.
Year-by-year growth schedule
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Future value | Total contributions | Total interest earned |
|---|---|---|---|
| ₪2.5k/mo · 5% · 6yr (naziel) | $209,410.65 | $180,000.00 | $29,410.65 |
| ₪1.5k/mo · 5% · 10yr | $232,923.42 | $180,000.00 | $52,923.42 |
| ₪50k + ₪3k/mo · 6% · 6yr | $330,828.78 | $266,000.00 | $64,828.78 |
| ₪2k/mo · 4% · 15yr | $492,180.98 | $360,000.00 | $132,180.98 |
How This Calculator Works
Enter your current hishtalmut balance, the total monthly contribution (employee + employer), the return you expect, and the years contributing. The calculator compounds the balance monthly and shows the projected value and the growth. The hishtalmut becomes withdrawable tax-free after six years; many Israelis treat it as their best supplementary savings account thanks to the unique mix of benefits.
The Formula
Future Value with Regular Contributions
P = starting amount, PMT = monthly contribution, r = monthly rate (annual ÷ 12), n = number of months
Worked Example
₪2,500 a month for 6 years at 5% grows to about ₪209,411, with roughly ₪29,411 of that being tax-free growth (within the salary-cap rules). The keren hishtalmut ('study fund' / 'training fund') is one of Israel's most attractive savings products. For salaried workers, the employee typically contributes 2.5% of salary and the employer 7.5% — so two-thirds of the inflow is from the employer. Contributions on salary up to the regulated cap are tax-deductible/exempt going in, the fund grows tax-deferred, and after six years the entire balance — including the gains — can be withdrawn fully tax-free.
Key Insight
The keren hishtalmut is widely considered the best tax-advantaged liquid savings vehicle in Israel, and a few features explain why. The contribution structure is the headline: for employees the typical split is 2.5% from the worker and 7.5% from the employer (the maximums most commonly used), so two-thirds of the monthly inflow is 'free money' from the employer — the equivalent of a substantial pay rise that goes straight into savings. Tax going in: contributions on salary up to the regulated ceiling (the tikra) are tax-favoured — the employee's share is deductible and the employer's contribution isn't treated as taxable salary, within the cap. Tax during: gains compound tax-deferred. Tax going out: after six years the fund becomes 'naziel' (liquid) and the entire balance — including all investment gains — can be withdrawn completely tax-free, an unusually generous treatment for a non-pension vehicle that you can also access early on grounds like funding professional training. Self-employed Israelis can also open a hishtalmut and contribute up to a defined percentage of net business income, deductible within an annual cap. Three caveats this estimate doesn't model: the salary cap (contributions above it remain allowed but lose the tax break), fund fees (management fees on the wrapper and inside the investment track compound over years, so low-cost tracks are favoured), and the fact that taking the fund out at six years 'resets' the clock for a new fund — many savers leave the money in past six years to keep compounding tax-free for as long as they need it. This calculator gives a gross, constant-return projection on whatever monthly inflow you enter; in practice optimise by using the full employer match, stay within the salary cap to keep the tax benefits, and pick a low-cost track aligned with your horizon.
Two ceilings for 2026: NIS 13,203 deductible and NIS 20,566 tax-free
Keren Hishtalmut has TWO distinct ceilings that often confuse savers. The first is the deduction cap (תקרת ניכוי): for self-employed (atzma'im), 4.5% of annual income up to NIS 293,379 = max deductible contribution of NIS 13,203/year. This is what reduces your income tax bill. For employees, the employer's contribution (typically 7.5% of salary) plus employee's 2.5% is automatically structured to maximize the deduction.
The second is the tax-free returns cap (תקרת פטור ממס): NIS 20,566/year. Up to this contribution amount, all the investment gains on the contributions are completely tax-free at withdrawal (after 6 years). Above this cap, the excess accumulates returns that ARE taxable on withdrawal — at the standard 25% capital gains rate.
Practical example: a self-employed earning NIS 400,000 deposits NIS 13,203 (the max deductible). This gives income tax saving of NIS 13,203 × marginal rate (say 35%) = NIS 4,621/year. They can ALSO deposit additional NIS 7,363 (up to the NIS 20,566 tax-free ceiling) — these get no income tax deduction, but their future gains are tax-free. Many top up to the tax-free ceiling even when they can't deduct it, because the tax-free compounding over years is valuable.
The 6-year clock and the after-6 free-withdrawal rule
After 6 years from your first deposit, you can withdraw the ENTIRE accumulated balance — both contributions and all investment gains — completely tax-free. This is the killer feature: Keren Hishtalmut is the ONLY broad savings vehicle in Israel offering tax-free withdrawal of investment gains.
Early withdrawal exceptions: after just 3 years, you can withdraw for 'education and training' purposes — academic studies, professional development for yourself or children. This withdrawal is also tax-free (provided documented as education-related). Outside these grounds, withdrawal before 6 years triggers 25% capital gains tax on the gains.
Strategy: many savers maintain MULTIPLE Keren Hishtalmut accounts opened in different years, creating a 'staircase' of mature accounts. After year 6, you can withdraw from the first account; in year 7, from the second; etc. This creates rolling tax-free liquidity. Alternative: leave a 6+ year mature account growing for decades — the tax-free compounding continues indefinitely, creating one of the most powerful long-term savings vehicles available.
Employees vs self-employed: very different tax mechanics
Employees (sakhirim): the employer contributes ~7.5% of gross salary to Keren Hishtalmut, and the employee adds 2.5%. This 7.5% employer share is NOT counted as part of the employee's taxable income up to specified ceilings — making it 'free money' in the sense that the alternative would be receiving the same as taxable salary. Most Israeli professional contracts include this benefit.
Self-employed (atzma'im): contribute entirely from their own funds, but get a corresponding income tax deduction on 4.5% of business income up to NIS 13,203. The deduction is taken on the annual income tax return. There's no employer match — the entire benefit is the income tax deduction + tax-free growth.
Strategic implication for high-income self-employed: the keren hishtalmut deduction is one of the few significant tax deductions available beyond the standard ones. Many self-employed at the top marginal rate (50%) consider this their highest-return 'investment' — a guaranteed 50% return on the deductible portion before any market returns. For self-employed earning under the income threshold, the deduction is proportionally lower but still meaningful.
Keren Hishtalmut benefits by status and income (2026)
Annual tax benefit from Keren Hishtalmut contributions. Employees include the employer's portion as a non-taxable benefit. Self-employed claim the deduction on their annual tax return.
| Income | Status | Annual contribution | Tax deduction value | Total benefit |
|---|---|---|---|---|
| NIS 200,000 (employee) | Sakhir | NIS 20,000 (10% salary, employer pays 75%) | Employer's NIS 15,000 not taxed as salary | NIS 5,250 tax saving + future tax-free returns |
| NIS 200,000 (self-employed) | Atzmai | NIS 9,000 (4.5% deductible) | NIS 9,000 × 35% = NIS 3,150 | NIS 3,150 + future tax-free returns on NIS 9,000 |
| NIS 293,000 (self-employed, max deductible) | Atzmai | NIS 13,200 (max deductible) | NIS 13,200 × 47% = NIS 6,204 | NIS 6,204 + tax-free returns |
| NIS 293,000+ atzmai (top up tax-free ceiling) | Atzmai | NIS 20,566 (tax-free ceiling) | Same NIS 6,204 (deductible portion only) | NIS 6,204 + tax-free returns on NIS 20,566 |
Self-employed should usually contribute at least up to the deduction cap (NIS 13,203). Beyond that, contributions up to NIS 20,566 are not deductible but still earn tax-free compounding — valuable for long-horizon savers.
Frequently Asked Questions
How is keren hishtalmut growth calculated?
Your balance and monthly contributions (employee + employer) compound at the expected return (annual rate ÷ 12 per month). ₪2,500/month for 6 years at 5% grows to about ₪209,411, with roughly ₪29,411 of tax-free growth — before fund fees and assuming you stay within the salary cap.
What is a keren hishtalmut?
Israel's 'study fund' or 'training fund' — a medium-term savings vehicle with major tax benefits. Employees typically contribute 2.5% of salary with the employer adding 7.5%. Contributions within the salary cap are tax-favoured, gains grow tax-deferred, and after six years the entire balance is withdrawable tax-free.
Why is the hishtalmut so attractive?
Three reasons: a large employer match (typically 7.5% of salary, three times the employee's 2.5%), tax-favoured contributions within the salary cap, and — uniquely — completely tax-free withdrawal (gains included) after six years. The combination of free employer money plus tax-free growth is rare for a liquid savings product.
What is the six-year rule?
After six years from the fund's opening (or first contribution, depending on the rules), the entire balance becomes 'naziel' — fully liquid and tax-free to withdraw. Many savers leave the money invested past six years to keep enjoying tax-free growth; withdrawing earlier than six years is generally taxable except in specific cases.
Can self-employed people open one?
Yes — self-employed Israelis can open a keren hishtalmut and contribute up to a defined percentage of net business income, deductible within an annual cap. The structure is slightly different from the employee version but offers similar tax-favoured contributions and tax-free withdrawals after the qualifying period.
References & Authoritative Sources
- רשות המסים בישראל (Israel Tax Authority) — Keren Hishtalmut — tax provisions · consulted May 31, 2026 · Israeli tax authority — annual deduction and tax-free ceilings, withdrawal rules
- פקודת מס הכנסה — סעיף 17(5א) — Income Tax Ordinance — Keren Hishtalmut deduction · consulted May 31, 2026 · Statutory basis — Section 17(5a) of the Income Tax Ordinance for self-employed deduction
- Israel Securities Authority — Hishtalmut funds — supervision and disclosure · consulted May 31, 2026 · Securities regulator — fund operator authorization, transparency rules
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Methodology & Review
The future value compounds a starting balance plus a fixed monthly contribution at the annual return, compounded monthly. It assumes a constant return and end-of-month deposits, and does not enforce the salary cap up to which contributions are tax-advantaged, model fees, or compute capital-gains tax on growth beyond the exempt portion.
Updated