Every salaried employee in Israel runs into it again each January: Form 101, officially called the "employee card". For the employee it's one more form to fill in; for the employer it's a regulatory duty that determines how much tax to withhold from every payslip — and a single missing form rolls straight into the employee's net pay. Here's what matters, from both sides.

What the form actually does

Income tax in Israel is withheld at source: the employer calculates and deducts the tax from the salary before the employee even sees it. To know how much to deduct, the employer needs to know things only the employee can declare:

• Personal details and family status — which affect tax credit points (residency, children, spouse).
• Whether this is the only income — or whether there's another employer, a pension or other income.
• Requests for tax relief — credit points for new immigrants, academic degrees, residents of qualifying localities, family credit and more.

That declaration is Form 101. Without it, the regulations default to withholding maximum tax — with no credit points at all.

When it's filled in

• When starting a job — before the first payslip with every new employer.
• At the start of every tax year — the form is valid for one calendar year, so it's filled in again every January, even with the same employer.
• When something changes — marriage, a birth, moving to a qualifying locality, starting an additional job: the employee must update the employer within a week of the change.

Two employers? That's where tax coordination comes in

An employee with more than one source of income marks this on the form with both employers. The secondary employer will withhold maximum tax — unless the employee presents a tax coordination certificate: an Israel Tax Authority approval that sets how to split the tax brackets and credit points between the sources. Tax coordination is done online today on the Israel Tax Authority website, and the approval is passed to the employers.

From paper to digital

For years the process was: print, fill in by hand, sign, scan, email, and hope the file is legible. The Israel Tax Authority has allowed an electronic Form 101 for years — provided the system meets the set rules: employee identification, data integrity, signature and secure storage of the form.

In RayClock the process works like this: the employee fills in the form in the system (from a phone or a computer), the accountant or payroll administrator approves it or sends it back for correction with a note, and the form is digitally signed with an approved provider that holds Israel Tax Authority approval. The screen shows at any moment who has submitted, who is midway and who hasn't started yet — by tax year. A signed copy is saved in the employee file. Read more on the digital Form 101 page.

A short January checklist

• Make sure every active employee has a Form 101 for the new tax year — including employees who joined in December.
• Make sure employees with a change in family status or income have updated their declaration.
• Ask employees with more than one employer for updated tax coordination — last year's coordination doesn't carry over automatically.
• Keep the signed forms somewhere ready for a withholding audit, not in an email inbox.

The information in this article is general and is not legal or tax advice. Collective agreements, industry extension orders and personal contracts may set different and sometimes more favorable arrangements, and the rules themselves are updated from time to time. For any specific question, we recommend consulting an employment lawyer or an accountant.