Moving to the US is one of the biggest financial decisions an Israeli founder makes. It affects personal tax, company payroll, social security and equity at the same time. Most costly mistakes come from doing things in the wrong order.
The Short Answer
Before you move: plan when Israeli residency ends, check how your equity is taxed on departure, confirm which social security system applies, and set up US payroll. After you move: file in both countries for the transition year and keep records that support your residency position.
Before the Move
- Plan the residency change. Israeli residency depends on your center of life, not only on days spent abroad. Read our nituk toshavut guide.
- Review your equity. Options and shares may be taxed on departure or when sold. See the equity compensation guide.
- Check social security. The Israel–US totalization agreement decides which country you pay into.
- Decide who employs you. Usually the US parent once you live in the US. See founder salary in Israel vs. the US.
- Open US banking. See how to open a US bank account from Israel.
During the Transition Year
| Item | Israel | US |
|---|---|---|
| Personal tax return | Usually required for the departure year | Usually required from arrival, with specific rules for part-year residents |
| Double tax relief | Credit under the treaty | Foreign tax credit under the treaty |
| Social security | Depends on totalization coverage | Depends on totalization coverage |
| Payroll | End or reduce Israeli payroll | Start US payroll |
The Israel–US tax treaty sets tie-breaker rules for residency and allows credits so the same income is not fully taxed twice.
After the Move
- Keep evidence of your new center of life: lease, family, bank accounts and memberships.
- Watch Israeli-source income, such as rent or dividends, which can still be taxed in Israel.
- Update the cost-plus agreement between the companies if your role moved to the US parent. See transfer pricing for Israeli startups.
Common Mistakes
- Assuming 183 days abroad ends Israeli residency on its own.
- Moving before checking how equity will be taxed.
- Paying social security in both countries for months.
- Forgetting US state tax when choosing where to live.
Frequently Asked Questions
What tax steps should an Israeli founder take before moving to the US?+
Plan when Israeli residency ends, review how your options or shares will be taxed on departure, check which social security system will apply under the totalization agreement, and decide which entity will employ you in the US.
Does the Israel–US tax treaty prevent double taxation?+
It reduces it. The treaty includes tie-breaker rules for residency and allows credits for tax paid in the other country, but each case depends on residency facts and timing.
Do I stop paying Bituach Leumi when I move to the US?+
Not automatically. The totalization agreement decides which country's system applies based on the type and length of your work abroad. Get a certificate of coverage where relevant to avoid paying in both countries.
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