If you've heard that a small holiday gift to employees is tax-free in Israel, that's not correct — and it's worth clearing up before your next Rosh Hashanah or Passover gift run. Under Israeli tax law, gifts given to employees around religious or national holidays (known as shai le-chag, "gift for the holiday") are always fully taxable as ordinary employment income. There is no threshold, no exemption, and no de minimis rule that shields holiday gifts from tax, regardless of how modest the item is. The exemption people are often thinking of exists, but it applies to something else entirely: genuine personal life-events, not holidays.
Why holiday gifts don't qualify for any exemption
Israeli tax authorities treat a holiday gift the same way they treat a bonus or any other form of compensation: it's value received because of the employment relationship, so it's added to the employee's taxable payroll. That means the full cost of the gift is subject to income tax withholding and National Insurance (Bituach Leumi) contributions, just like salary. This applies whether the gift is a bottle of wine, a gift basket, or a branded hoodie — there's no special carve-out for holiday-timed gifts, no matter how small. If a business budgets for holiday gifts assuming they're "tax-free up to a certain amount," that assumption is simply wrong under current rules.
The real exemption: personal life-events, ₪240/year
The exemption that actually exists in Israeli tax law is narrower and tied to specific personal milestones, not the calendar. A "reasonable amount" gift given for marriage, childbirth, or a bar/bat mitzvah can be exempt from tax, up to a cap that's indexed and adjusted periodically — currently ₪240 per employee per year (the figure has risen over time, from roughly ₪210 to ₪230 and now to ₪240). Gifts beyond this amount, or gifts given for any occasion outside these three life-events, fall back into fully taxable territory. It's a meaningful distinction: the exemption is about the employee's personal milestone, not about the employer's holiday calendar.
Cash and vouchers never qualify
Even when a gift does relate to a qualifying life-event, the form of the gift matters. Cash and cash-equivalents such as gift cards or vouchers never qualify for the exemption — they're treated as fully taxable income regardless of the occasion or the amount. This is consistent across both categories: holiday gifts are always taxable, and life-event gifts only stay exempt (up to ₪240) if they're an actual physical item, not money or something redeemable as money. If you want to give something with a real shot at favorable tax treatment for a life-event, it needs to be a tangible product.
12 gift ideas for holidays and life-events in Israel
Since holiday gifts are taxed either way, many companies choose to focus the budget on quality, branded items that employees actually keep and use — rather than cash, which is taxed the same but feels less thoughtful. Here are 12 options that work well for Rosh Hashanah, Passover, or year-round appreciation gifts, priced in NIS with minimum order quantities (MOQs) from Sunday's catalog.
Hoodie – The Rex
A premium hoodie is one of the highest-perceived-value items you can give — it reads as a real gift rather than a token gesture, and it gets worn well beyond the office.
- Material: Heavyweight cotton-poly fleece blend
- Branding: Embroidery or large-format print on chest/back
- Order: MOQ 100 · from ₪160/unit.
Sports Socks
A fun, low-cost add-on that pairs well with a bigger item — useful for stretching a gift budget across a large team without feeling cheap.
- Material: Cotton-elastane blend
- Branding: Woven or knitted logo detail
- Order: MOQ 100 · from ₪16/unit.
Recycled Steel Bottle
A daily-use item made from recycled steel — practical, sustainable, and a good fit for companies that want their holiday gift to reflect ESG values.
- Material: Recycled stainless steel
- Branding: Laser engraving or full-color print
- Order: MOQ 50 · from ₪44/unit.
A5 Notebook
A simple, universally useful gift that works at scale — good for large headcounts where the priority is giving every employee something during the holiday season.
- Material: Recycled paper, hardcover
- Branding: Debossing or foil stamp
- Order: MOQ 100 · from ₪18/unit.
Premium Tote Bag
Sturdy enough for daily commuting or grocery runs, a well-made tote gets far more real-world use than most branded merchandise.
- Material: Heavyweight cotton canvas
- Branding: Screen print or embroidery
- Order: MOQ 100 · from ₪26/unit.
Knitted Scarf
A cozy, seasonal item that fits well with a winter or early-spring holiday gift, and feels more personal than a purely functional product.
- Material: Acrylic-wool knit blend
- Branding: Woven label
- Order: MOQ 100 · from ₪31/unit.
Baseball Cap
An easy, well-liked staple that works across ages and roles — a reliable pick when you want broad appeal without overthinking sizing or fit.
- Material: Cotton twill
- Branding: Embroidered logo
- Order: MOQ 100 · from ₪33/unit.
Espresso Mug
A small, cheerful desk item that's easy to give in bulk — good for a lighter-touch holiday gesture alongside a card or note.
- Material: Ceramic
- Branding: Full-color print or logo decal
- Order: MOQ 108 · from ₪34/unit.
Bamboo Tea Bottle
A step up from a standard bottle, with a natural bamboo finish that reads as a more considered, higher-end gift for holidays or milestones.
- Material: Glass with bamboo sleeve
- Branding: Laser engraving on bamboo
- Order: MOQ 50 · from ₪75/unit.
RollTop Backpack
A genuinely premium option for a flagship holiday gift or a milestone life-event gift — durable, practical for commuting, and memorable as a gesture.
- Material: Water-resistant recycled polyester
- Branding: Debossed logo patch
- Order: MOQ 25 · from ₪98/unit.
Noise-Cancelling Headphones
A high-value tech gift that stands out for a senior team or an anniversary-style milestone — genuinely useful for commuting, travel, or focus time at work.
- Material: ABS plastic, memory-foam ear cushions
- Branding: Laser engraving or box branding
- Order: MOQ 50 · from ₪98/unit.
View noise-cancelling headphones
Wireless Powerbank
A practical, always-useful gift that fits any budget tier and travels well — a safe choice when you want something people will actually carry and use.
- Material: Aluminum housing
- Branding: Laser engraving
- Order: MOQ 50 · from ₪74/unit.
What about client gifts?
Business gifts to clients and partners follow a related but distinct rule. The same ₪240 per person per year figure applies as a deductibility cap for the giving business — a gift up to that amount is deductible, provided you keep documentation of the recipient's identity, the business relationship, and receipts. Spend above ₪240 per recipient doesn't get disallowed outright; instead it becomes an "excess expense" subject to a flat 45% surtax on the giving company. That's a different mechanism than in some other countries, where excess gift spend is simply non-deductible — in Israel, it's actively penalized at the company level.
There's a more favorable path, though, for genuine broad-based promotional merchandise: branded items distributed to a wide, indefinite class of customers or prospects (think branded pens at a trade show, or welcome-kit items sent to every new signup) are treated as an ordinary marketing expense with no per-person cap, as long as they're not personalized gifts to specific named individuals. The distinction is about who receives the item and how it's targeted, not the product itself.
Common mistakes
- Assuming a small holiday gift is tax-free. It never is under Israeli law — every shai le-chag gift is fully taxable as employment income, regardless of value.
- Assuming the ₪240 exemption applies to any occasion. It's limited specifically to marriage, childbirth, and bar/bat mitzvah — not holidays, work anniversaries, or general appreciation gifts.
- Giving personalized gifts to specific clients and assuming they get the same favorable treatment as broad-based branded merchandise. A named gift to one client is capped at ₪240 with a 45% surtax above it; only genuinely broad, unaddressed promotional distribution avoids the cap.
If you're setting up an ongoing employee gifting program rather than a one-off order, Sunday's employee gifting platform handles sourcing, branding, and delivery in one place.
This article is for general informational purposes and reflects our understanding of Israeli tax rules as of publication. It isn't tax or legal advice. Rules and thresholds are updated periodically — confirm current figures with a licensed Israeli tax advisor or accountant before making payroll or gifting decisions.
Planning gifts for a team outside Israel too? See our full guide to employee gift tax rules by country for how the rules compare elsewhere, or browse Sunday's catalog to build a compliant, branded gift program for your holiday season. Sunday also supports enterprise-scale rollouts across multiple countries — see the full Sunday platform for details.
