Claiming US Social Security While Living in Israel

An American couple planning their move from New Jersey to Jerusalem arrived at my office with one worry ahead of all the others. A neighbour who had retired to a country outside the US had told them his pension was "stuck," never rising, and they assumed a move abroad meant the same for their Social Security. It does not. US Social Security travels to Israel more smoothly than almost any other retirement income an American holds, it keeps its annual increase, and where it is taxed has a clean answer. What needs attention is not the benefit itself but the pieces around it: how it is paid across an ocean, how it meets the Israeli health system, and a missing agreement that costs the still-working more than the retired.

If you are a US citizen drawing, or about to draw, Social Security and you intend to live in Israel, this guide sets out how each part works from your side. It sits alongside our broader guide to retiring in Israel as a US citizen, which covers the visa and wider tax picture.

Your Benefit Is Not Cut Off, and Not Frozen

The first fact is the reassuring one. A US citizen keeps Social Security retirement, survivor, and most disability benefits while living in almost any country, and Israel is squarely on the approved list. You do not lose the benefit by relocating and you do not need to keep a US address to receive it.

Two things people conflate deserve to be pulled apart. Some countries do "freeze" certain foreign pensions, meaning the amount never rises. That is a feature of specific pension systems, most famously the UK State Pension in places like Canada and Australia. It is not a feature of US Social Security. Your benefit carries its annual cost-of-living adjustment, the COLA, wherever you live, so it continues to rise year on year in Israel exactly as it would in Florida. There is no residence-based freeze to plan around.

What does change is the plumbing. The Social Security Administration pays overseas beneficiaries through international direct deposit, either into a participating Israeli bank in shekels or into a US account you keep open in dollars. You enrol using the SSA's Israel direct-deposit form, and payment usually reaches a shekel account the day after the US payment date. Whether to take the money in shekels or keep it in dollars is a genuine decision, because the conversion built into direct deposit is not always the sharpest rate, and some retirees prefer to receive dollars and convert through a specialist. Either way, opening the Israeli account is its own hurdle for a new arrival, and a steady foreign government credit is exactly what a bank will want explained.

Getting It Paid and Keeping It Paid from Abroad

Administration happens from the US side, but you deal with it through a local channel. Americans in Israel handle Social Security through the Federal Benefits Unit attached to the US Embassy, which processes claims and questions for beneficiaries in the region. You can file a retirement claim from Israel, and survivor benefits for a widow or widower who is a US citizen are payable in Israel too.

One recurring piece of housekeeping catches people out. The SSA periodically sends overseas beneficiaries a questionnaire, form SSA-7162, to confirm they are alive and still entitled. It is the American equivalent of a life certificate. Return it late and the SSA suspends payments until you file it, and restoring a suspended benefit from abroad is slower than stopping it ever was.

Common Mistake: US citizens in Israel put the SSA-7162 questionnaire aside, or it goes to an old US address after a move, and payments are suspended for non-response. The Social Security Administration will not resume the benefit until the form is filed, and unwinding a suspension from abroad, through the Federal Benefits Unit at the US Embassy, commonly takes two to four months during which nothing is paid. Keep your address current with the SSA, watch for the questionnaire, and return it on time.

Where the Tax Falls

Two tax systems could reach the same benefit, and the rules decide cleanly between them. For US Social Security the answer runs opposite to the way many other pensions work, so it is worth stating precisely.

The United States taxes its citizens on worldwide income wherever they live, and a Social Security benefit is part of that: depending on your other income, up to 85% of the benefit can be included in US taxable income. The benefit is paid gross, with no tax withheld at source unless you ask for voluntary withholding, and many retirees whose income is mostly Social Security owe little or no US tax once the standard deduction is applied. But the benefit stays within the US net because you are a US citizen.

Israel, on the other side, does not tax it. Under Article 21 of the US-Israel income tax treaty, the article dealing with social security payments, a benefit is taxable only in the country that pays it, and this is one of the few provisions the treaty's saving clause leaves intact. The result is that a US Social Security benefit received by a resident of Israel is taxed by the United States and not by Israel. That is different from, say, the UK State Pension, which the treaty with Britain assigns to the country of residence, so Israel taxes it once the new-immigrant exemption ends. For US Social Security the allocation points the other way, to the US, and it does not flip after any number of years in Israel. Claiming a treaty position that overrides ordinary US law is disclosed to the IRS on Form 8833, and the interaction is worth mapping with a cross-border adviser using our guide to the US-Israel tax treaty.

In Practice: A new immigrant (oleh) is exempt from Israeli tax on foreign-source income, including a US pension or Social Security benefit, for ten years from the date of becoming resident, under Section 14(a) of the Income Tax Ordinance 1961. A couple's combined US benefit of, say, USD 40,000 a year is roughly NIS 148,000 at about NIS 3.7 to the dollar, and for a US oleh that whole sum sits outside Israeli income tax through the Israel Tax Authority (Rashut HaMasim) for a full decade. The exemption is automatic from the residency date and needs no annual application; combined with the treaty's social security rule, US Social Security stays outside the Israeli charge even after the ten years run out.

The Missing Agreement, and Who It Hurts

Here the news turns practical rather than reassuring, and it matters most to Americans who are still working, not those simply drawing a benefit.

The US has social security totalization agreements with around thirty countries. Israel is not one of them. There has never been a US-Israel totalization agreement, and the widely repeated claim that one exists is wrong. Two consequences follow. First, credits do not combine: the forty US credits, roughly ten years of covered work, that qualify you for a US benefit cannot be topped up with years of Israeli National Insurance contributions, and vice versa, so a split career can fall short in both systems even though a combined record would have cleared either threshold. Second, and more painful, contributions overlap. A self-employed American in Israel owes US self-employment tax at 15.3% on worldwide self-employment profit and, at the same time, Israeli National Insurance (Bituach Leumi) and health contributions on the same profit, with no agreement to lift either charge. The foreign earned income exclusion does not help, because it reduces US income tax and never touches self-employment tax. Our note on the US-Israel totalization gap works through the self-employed position in detail.

In Practice: Under the National Insurance Law [Consolidated Version] 5755-1995, the National Insurance Institute (Bituach Leumi) collects self-employed contributions at progressive rates, roughly 6% in the lower income band and rising toward 18% at the top once National Insurance and health tax are combined. A self-employed American earning NIS 400,000 pays these and, on top, US self-employment tax at 15.3% on the same profit, because no totalization agreement removes either charge. Registration with Bituach Leumi is required within 90 days of starting activity, contributions are paid monthly, and the US self-employment tax falls due with the annual Form 1040 each April. Budget for both from the outset; there is no relief to claim afterward.

Good News on WEP: The Reduction Is Gone

For years a specific trap reduced the US benefit of Americans who had also worked in Israel. The Windfall Elimination Provision cut Social Security for anyone drawing a pension from employment not covered by US Social Security, which describes most Israeli work, and the related Government Pension Offset reduced spousal and survivor benefits on the same logic.

That is over. The Social Security Fairness Act, signed on 5 January 2025, repealed both the WEP and the GPO. The reduction last applied to benefits for December 2023, and affected beneficiaries received increased monthly payments and retroactive lump sums covering the period back to January 2024. A US citizen with an Israeli pension from non-covered work is no longer reduced under WEP, and older guidance, including material still circulating that warns retirees in Israel about the provision, is now out of date. If your benefit was cut under WEP in the past and you are unsure whether the correction reached you, it is worth checking your payment record with the SSA.

Medicare Does Not Come With You

A benefit pays your bills; it does not carry your US health cover across the ocean. Medicare generally does not pay for care received in Israel, so the coverage you relied on in the US effectively stops at the water's edge. In its place, becoming an Israeli resident brings you into the National Insurance system and, through it, membership of a kupat holim and the public health basket, subject to contributions and any waiting period for new residents who are not returning citizens. Many American retirees keep paying Medicare Part B premiums anyway, to preserve the option of care on US visits, but that is a hedge, not day-to-day cover in Israel. We set out the interaction in our answer on Medicare and US health insurance in Israel.

Practical Checklist

• Confirm your benefit estimate with the SSA before you move, and decide whether to be paid into an Israeli account in shekels or a US account in dollars
• Enrol in international direct deposit using the SSA's Israel form, and compare the conversion against a currency specialist
• Keep your address current with the SSA and return the SSA-7162 questionnaire promptly to avoid a suspension
• Deal with claims and questions through the Federal Benefits Unit at the US Embassy
• If you are self-employed, budget for both US self-employment tax and Israeli National Insurance, since no totalization agreement relieves the overlap
• If you were ever reduced under WEP, check with the SSA that the post-repeal correction reached your record
• Register with the National Insurance Institute on becoming resident to secure health cover, and treat Medicare as a US-visit hedge, not local cover
• Take coordinated US and Israeli advice on how the treaty taxes the benefit before you rely on a net figure

Speak With an Israeli Attorney

US Social Security reaches Israel intact, keeps its annual increase, and is taxed by the United States rather than by Israel, but the payment setup, the health transition, and the self-employment overlap all reward being handled deliberately. We help US citizens settle their Israeli residency and tax position, coordinate with US advisers on the treaty and Social Security, and plan around the totalization gap before it costs money.

Contact us for a confidential initial consultation.