Tax credit point update (Kachlon law) June 2017

The Israel Tax Authority published a new directive to employers on May 28, 2017 regarding tax credit points to parents of children who are salaried employees via their payslip.
1. The number of tax credit points will now be equal for men and women. All parents are now eligible for 1.5 tax credit points in the year their child is born and 2.5 tax credit points in the years the child is age 1 to age 5.
2. This directive is effective for the tax years 2017 and 2018 only (from Jan 2019 it is cancelled, unless an extension is approved by the government).
3. Effective in June 2017 salary (to be paid by July 9, 2107), employers will credit their employees to whom this applies with the additional tax credit points, retroactive to January 2017.
For women: In the year the child is born you will receive 1.5 tax credit points (instead of 0.5 up until now) and in the years the child’s age is 1-5 you will get 2.5 tax credit points (instead of 2 up until now). You can elect to defer 1 tax credit point of the 1.5 allotted for each child to the following tax year (2018). This is done by filling out a 116 D tax form and giving it to your employer (HR or salary dept). You will need to also fill out this form in 2018 (section dalet).
Men do not have this option of deferring tax credit points.
For men: In the year the child is born you will receive 1.5 tax credit points (instead of 1 up until now). In the years the child’s age is 1-2 you will receive 2.5 tax credit points (instead of 2 up until now) and in the year the child’s age is 3 you will receive 2.5 tax credit points (instead of 1 up until now) and in the years the child’s age is 4-5 you will receive 2.5 tax credit points (instead of none up until now).
This will lower taxes on working parents salaries and raise their net pay. The tax credit points are monthly.
Employers: you need to keep this form 116 D with the employee’s 101 tax form.