Within the Economic Efficiency law of 2009,  a gradual reduction in both corporate and individual income tax rates was established. Accordingly, the corporate tax was set to 25% in 2010, 24% in 2011, 23% in 2012 etc’. The final reduced tax rate was established to 18% in 2016. The top individual income tax bracket was to be gradually reduced until it reaches 39% in 2016.

On May 16, 2011 the Israeli parliament’s (the Knesset) Finance Committee concluded that the corporate tax rates reduction (from 24% to 23%), planed for 2012 will be frozen, and thus the corporate income tax will remain 24% during 2012.

The reduction of individual income tax rate planed for 2012 will also be frozen, thus the top tax bracket remains at the rate of 45% on annual income exceeding 180,000 U.S. Dollars. It remains to be seen whether the planned reduction of income tax rates will be resumed in the future.