Money in Israel: Shekels, Cards, Tipping and Tourist VAT Refunds
Use shekels for everyday spending, carry a physical payment card as backup and check tourist VAT eligibility before buying goods. A qualifying purchase still requires the correct shop, paperwork and departure inspection.
A holiday budget has several moving parts: the price on the receipt, your card provider's conversion costs, any tip and any refund that you can actually claim. Keep those amounts separate when comparing what something will cost. The figures below reflect official guidance checked in October 2026.
Recognize the shekel and keep a backup
Israel's currency is the new Israeli shekel, written NIS, ILS or ₪. One shekel contains 100 agorot. Bank of Israel currency information lists notes of ₪20, ₪50, ₪100 and ₪200, and coins of 10 agorot, half a shekel, ₪1, ₪2, ₪5 and ₪10.
Keep some smaller denominations for modest purchases and situations where a card is unavailable. Carry a physical card even if you normally pay by phone. Store a second payment method separately so that a lost wallet or flat battery does not remove every option at once.
Foreign cash is not a substitute for checking what a business accepts. Ask for the total in shekels before agreeing to a price in another currency.
Cards, wallets, ATMs and exchange rates
Bank of Israel describes contactless cards and mobile wallets as part of Israel's payment infrastructure. Acceptance still depends on the merchant, card network and issuer. Confirm that your card is enabled for overseas transactions and know its PIN.
At an ATM, read the withdrawal charge and conversion offer before confirming. Compare the total cost with your issuer's terms, including any foreign transaction or cash withdrawal fees. A machine offering payment in your home currency is offering a conversion service; inspect the rate rather than assuming it is cheaper.
The Bank of Israel's representative exchange rate is a reference, not a guaranteed retail rate. Banks and exchange offices can quote different buying and selling rates. Ask how many shekels you will receive after all charges and retain the receipt.
Do not rely on withdrawing cash with a phone. The central bank announced a gradual rollout of contactless ATM withdrawals in May 2026, with later implementation stages. Carry the physical card you expect to use.
Tipping at restaurants and in taxis
Tel Aviv's municipal tourism guidance describes a customary tip of 10 to 15 percent for seated restaurant service. This is a custom, not a universal government service charge. Check whether service has already been included and ask whether a tip can be added to the card payment.
The same municipal guidance says taxi drivers do not expect a tip, although rounding up is appreciated. Keep the fare and any voluntary tip separate. For tours or hotel services, ask about arrangements in advance rather than assuming a restaurant percentage applies everywhere.
VAT, hotels and Eilat
Israel's standard VAT rate is 18 percent as of October 2026. Earlier Tax Authority guidance described a conditional zero rate for tourist hotel stays. Israel News Pulse could not independently find information confirming its current application after tourism VAT changes were discussed in the 2026 budget. Ask the hotel for a tax inclusive quote and retain your passport and entry documentation.
The hotel rule is distinct from obtaining a refund on goods at departure. Being a foreign visitor does not make every restaurant bill or domestic purchase tax free.
Eilat has a separate free trade area tax regime with conditions and exceptions. It is not a blanket zero rate for everything sold in the city. The Tax Authority's tourist guidance, for example, distinguishes jewellery purchases according to value. Confirm the tax treatment on the specific receipt; if no VAT was charged, there is no VAT on that purchase to reclaim.
Check eligibility before buying goods
The Tax Authority lists a minimum qualifying purchase of ₪186 including VAT. Buy from an approved participating business and obtain both the tax invoice and the designated tourist refund document at purchase. The goods must leave Israel with you, be for personal use and be in noncommercial quantities.
Eligibility depends on entry status. The authority lists qualifying visitor documentation and excludes B1 entry and generally Israeli dual nationals, with a stated exception for certain minors born abroad. Ask the refund operator if your status is uncertain before relying on a refund.
Food, drink and tobacco are excluded under the tourist refund guidance. For jewellery and valuables above ₪20,000 including VAT, the authority requires the shop's original sealed bag to remain unopened until inspection.
Fees reduce the amount received. The Tax Authority currently lists ₪27 per designated document, subject to indexation, with extra charges for some payout methods. Request the current fee calculation rather than budgeting for the full VAT amount.
Keep goods accessible at the airport
At Ben Gurion, the Airports Authority instructs passengers with goods in checked baggage to present them and the documents at the VAT counter before checking the bag. Keep your passport, invoice and refund form together and leave enough time for inspection.
After the required approval, follow the operator's instructions for receiving the refund beyond border control. Counter locations can change, so check airport signs and current operator information on the day.
Apply before leaving Israel. The Tax Authority says applications submitted from abroad will not be approved. The Airports Authority also states that refunds concern purchases from the current visit, not goods bought on earlier trips.
