How the calculation works, in plain language
1. Work out the US profit
Revenue minus actual business expenses. For an osek zair, the Israeli 30% deduction is not copied automatically to the US.
2. Calculate Self-Employment Tax
Usually 12.4% for Social Security plus 2.9% for Medicare, after the 92.35% adjustment, subject to the wage base and the $400 net self-employment earnings threshold.
3. Check eligibility
In 2026 you earn one credit for every $1,890 of covered earnings, up to four a year. A retirement benefit usually requires 40 credits, that is, at least 10 years.
4. Estimate the benefit
The SSA uses your 35 highest years of earnings after indexing them to wages. With fewer than 35, the missing years count as zero. The calculator uses an average, so it gives an estimate only.
5. Compare with the alternative
The calculator compares the addition to the benefit with the Social Security part of the tax invested at a 3%, 5% or 7% real return, with a 3.5% annual withdrawal. It compares value for money. It does not give permission to skip a tax you owe.
What exactly changed in 2025?
WEP was not a flat 50% cut to the benefit. It changed the formula: on the first part of average monthly earnings, the 90% replacement rate could drop as low as 40%, subject to limits and to the number of years of covered work. GPO dealt with spousal and survivor benefits. The Social Security Fairness Act was signed on January 5, 2025 and repealed both for benefits from January 2024 on. An Israeli pension therefore no longer reduces a US benefit through WEP or GPO. The law did not remove the tax for the self-employed and did not create a Totalization Agreement between Israel and the US, so years of insurance in the two countries still do not combine.
And what if the same amount were invested?
3%$359Amount invested each year: $3,022
5%$482Amount invested each year: $3,022
7%$656Amount invested each year: $3,022
All three scenarios assume a return after inflation and a 3.5% annual withdrawal, and invest only the Social Security part.
How partial funding would affect the calculated addition
100%$1,247The benefit under current law
78%$973What ongoing revenue funds once the OASI trust fund is depleted
62%$773The long-range scenario in the same report, toward 2100
According to the 2026 Trustees Report, the OASI trust fund is projected to be depleted in the fourth quarter of 2032, when ongoing revenue will cover 78% of benefits. The numbers here are the addition calculated above, not the total benefit, so the whole page speaks in the same terms.
Social Security vs. investing
| Option | What you get | What to keep in mind |
|---|
| Paying Self-Employment Tax | An inflation-adjusted dollar benefit for life, plus disability and survivor coverage under the rules | Payment is usually mandatory. There is no personal account, and the Medicare part is of little use in Israel. |
| Investing in the market | A liquid asset you can pass on, with control over the level of risk | Returns are not guaranteed. There is volatility, tax, fees, and the risk that the money runs out. |
Why does the repeal of WEP change the picture?
Before the change, a pension from work not covered by Social Security could trigger a less generous formula for your own benefit, and GPO could reduce spousal and survivor benefits. The law signed in January 2025 repealed both for benefits from January 2024 on.
Is it worth paying?
If the tax applies, this is not an investment decision. The practical question is whether you report correctly, and whether there is a legal employment alternative that fits the work you actually do. In terms of value, the 40 credits, the number of zero years inside the 35-year average, and your claiming age matter far more than the headline "15.3%".
What does a spouse who never worked in the US get?
Up to 50% of your base benefit, meaning the amount you would receive at full retirement age. It is a separate benefit that is added to yours and does not reduce it. The conditions: at least one year of marriage, age 62 or older, and you yourself have already started collecting. If they have a US work record of their own, they get the higher of the two, not both.
Why doesn't delaying my benefit increase theirs?
Your benefit grows by two thirds of a percent for each month of delay up to age 70, but the spousal benefit is always calculated from your base benefit, not from what you actually receive. So delaying increases only your part. The other direction does work: starting early reduces theirs, and at 62, 32.5% of your base benefit remains instead of 50%.
My spouse is not a US citizen and lives in Israel. Will the benefit be paid?
As a rule, family members who are not US citizens stop being paid after six consecutive months outside the US, and there is also a five-year US residency requirement. The SSA classifies Israel as a treaty country, which exempts Israeli citizens from both restrictions. That holds under the current classification, and it can change. Either way, check your own case with the SSA before relying on it.
Why does the comparison invest 12.4% and not 15.3%?
The Medicare part of the tax buys US health insurance, not a retirement benefit. Investing the whole tax against a benefit bought with only part of it would inflate the investment side by about 23%. So the comparison sets exactly the same money side by side, and the Medicare part is shown separately as a cost with no benefit against it.
Social Security for the Self-Employed in Israel
How much US self-employment tax may apply, what it adds to your benefit, and how that compares with investing the same money yourself.
What does this calculator check?
If you are a US citizen with a self-employed business in Israel, the US may expect a payment you have not planned for. It is called Self-Employment Tax, and it is the American counterpart of the Bituach Leumi contributions a self-employed person pays here. It can apply even when the business is in Israel, the clients are in Israel and the money goes into an Israeli account, because what counts is your citizenship, not where the business is.
The other side of the coin is that this money does not disappear. It is recorded in your name with Social Security and builds entitlement. First you usually need 40 credits, up to four a year, to qualify for a retirement benefit. After that, the size of the benefit depends on your 35 highest years of earnings and on the age you start collecting. Put simply: ten years at least open the door, and the amount is decided separately.
If your net profit from the business is at least $400, this is usually an obligation and not a choice. The comparison with investing is here to show what you get for the money. It is not a suggestion to avoid paying.
Your details
Change a field and watch the result update.
I already have Social Security creditsOpen this only if you have already worked in a job covered by Social Security, or your statement already shows credits.
Your statement shows two different things. Credits decide whether you qualify, and the Earnings Record decides how much you get.
Shown on your Social Security Statement.
Count only years with an amount.
A reasonable estimate works.
More details that matter only in some cases
Regular Israeli wages usually do not go here.
For illustration only.
Your result
An estimate based on 2026 figures and rules.
Tax per year$3,729
Credits by the end40 of 40
Monthly benefit$1,247at age 67
In the range you entered you become eligible, and the benefit is higher than the monthly equivalent of the same money in an investment portfolio, even at a 7% real return.
Step 1: What it costs
The tax is calculated on your US profit, after the 92.35% Schedule SE adjustment.
Eligibility: it all depends on 40 credits
40 of 40Credits by the time you stop working
Below 40 credits there is no benefit at all, and from 40 on there is. The whole benefit below comes from these payments. If you stop earlier, what you have already paid will not create a retirement benefit.
What does each additional year of work add?
The increase is not even along the way. There are points where it jumps, drops or stops.
Years 1 to 9
Adds nothing
No benefit yet. These years only build credits toward 40.
Year 10
$522 a month
This is the year that opens the benefit. Until then the benefit is zero, so this year is worth many times more than any other.
Total tax so far: $37,286
Years 11 to 22
$52 a month
From here, every year adds the same amount to the benefit.
Year 23
$24 a month
From here, every year adds less. The SSA credits the first part of your average earnings at a more generous rate, and you have already passed it.
Years 24 to 27You are here
$19 a month
The calculation assumes the same annual earnings in every future year, so the increase is constant within each step.
How long until it pays back?
After that period, the benefit continues for life.
The tax is usually not a choice, and the calculator does not recommend that you stop filing or change how you are classified.
Step 2: What you get
Based on the claiming age you chose, in today's dollars.
Step 3: Compared with investing the same money
The comparison invests only the Social Security part of the tax, 12.4%, because that is the part that buys the benefit. The Medicare part appears in step 1 as a separate cost.
The addition to the benefit is higher than the monthly equivalent of the portfolio
Even at a 7% real return, turning 3.5% of the portfolio into a monthly amount gives less. This is a rough aid only: a portfolio is not a pension.
How is a portfolio turned into a monthly number?
An investment is not a pension. For comparison only, the calculator takes 3.5% of the portfolio each year and divides by 12. For example, a $100,000 portfolio translates to about $292 a month. The money remains a volatile portfolio, and the amount is not guaranteed for life.
What the calculator assumes, and what it does not do
And what do you get from Bituach Leumi in Israel?
It is a separate system. You can be entitled to both benefits at the same time, and no agreement links your years of insurance in Israel to US credits.
Sets the seniority increment in the benefit.
Can the income be received another way?
Sometimes, and the way you report has to match the way you actually work. These are directions to check with an accountant who knows both countries, not options you tick on a form.
Be a real employee
If an Israeli client or organization actually employs you, pays a salary and carries the obligations of an employer, wages for work outside the US are usually not subject to US Self-Employment Tax.
Classification as a common law employee
Even without an Israeli payslip, the facts may show an employer-employee relationship for US purposes: who decides how the work is done, who carries the business risk, and how permanent the relationship is. It is a factual determination that has to be supported, not a label you can choose to save tax.
Work through a company (Ltd.)
A salary from an Israeli company may not count as self-employment income in the US. On the other hand, American owners may have to file a detailed annual return on the company, Form 5471. CFC and GILTI rules may in some cases impose US tax even on profits still held in the company. The cost and complexity can outweigh the savings.
An invoicing company for freelancers
A payslip alone does not make you an employee. If the company only issues an invoice and passes the money on minus a fee, with no real employment relationship, the arrangement may be rejected in Israel or in the US.
Before you change how you operate, compare the whole picture: US tax, Israeli tax and Bituach Leumi, company costs, filing obligations, and the benefit you give up. There is no single solution that is right for everyone.
Want to understand how this works?
How the calculation works, in plain language
1. Work out the US profit
Revenue minus actual business expenses. For an osek zair, the Israeli 30% deduction is not copied automatically to the US.
2. Calculate Self-Employment Tax
Usually 12.4% for Social Security plus 2.9% for Medicare, after the 92.35% adjustment, subject to the wage base and the $400 net self-employment earnings threshold.
3. Check eligibility
In 2026 you earn one credit for every $1,890 of covered earnings, up to four a year. A retirement benefit usually requires 40 credits, that is, at least 10 years.
4. Estimate the benefit
The SSA uses your 35 highest years of earnings after indexing them to wages. With fewer than 35, the missing years count as zero. The calculator uses an average, so it gives an estimate only.
5. Compare with the alternative
The calculator compares the addition to the benefit with the Social Security part of the tax invested at a 3%, 5% or 7% real return, with a 3.5% annual withdrawal. It compares value for money. It does not give permission to skip a tax you owe.
What exactly changed in 2025?
WEP was not a flat 50% cut to the benefit. It changed the formula: on the first part of average monthly earnings, the 90% replacement rate could drop as low as 40%, subject to limits and to the number of years of covered work. GPO dealt with spousal and survivor benefits. The Social Security Fairness Act was signed on January 5, 2025 and repealed both for benefits from January 2024 on. An Israeli pension therefore no longer reduces a US benefit through WEP or GPO. The law did not remove the tax for the self-employed and did not create a Totalization Agreement between Israel and the US, so years of insurance in the two countries still do not combine.
And what if the same amount were invested?
All three scenarios assume a return after inflation and a 3.5% annual withdrawal, and invest only the Social Security part.
How partial funding would affect the calculated addition
According to the 2026 Trustees Report, the OASI trust fund is projected to be depleted in the fourth quarter of 2032, when ongoing revenue will cover 78% of benefits. The numbers here are the addition calculated above, not the total benefit, so the whole page speaks in the same terms.
Social Security vs. investing
Why does the repeal of WEP change the picture?
Before the change, a pension from work not covered by Social Security could trigger a less generous formula for your own benefit, and GPO could reduce spousal and survivor benefits. The law signed in January 2025 repealed both for benefits from January 2024 on.
Is it worth paying?
If the tax applies, this is not an investment decision. The practical question is whether you report correctly, and whether there is a legal employment alternative that fits the work you actually do. In terms of value, the 40 credits, the number of zero years inside the 35-year average, and your claiming age matter far more than the headline "15.3%".
What does a spouse who never worked in the US get?
Up to 50% of your base benefit, meaning the amount you would receive at full retirement age. It is a separate benefit that is added to yours and does not reduce it. The conditions: at least one year of marriage, age 62 or older, and you yourself have already started collecting. If they have a US work record of their own, they get the higher of the two, not both.
Why doesn't delaying my benefit increase theirs?
Your benefit grows by two thirds of a percent for each month of delay up to age 70, but the spousal benefit is always calculated from your base benefit, not from what you actually receive. So delaying increases only your part. The other direction does work: starting early reduces theirs, and at 62, 32.5% of your base benefit remains instead of 50%.
My spouse is not a US citizen and lives in Israel. Will the benefit be paid?
As a rule, family members who are not US citizens stop being paid after six consecutive months outside the US, and there is also a five-year US residency requirement. The SSA classifies Israel as a treaty country, which exempts Israeli citizens from both restrictions. That holds under the current classification, and it can change. Either way, check your own case with the SSA before relying on it.
Why does the comparison invest 12.4% and not 15.3%?
The Medicare part of the tax buys US health insurance, not a retirement benefit. Investing the whole tax against a benefit bought with only part of it would inflate the investment side by about 23%. So the comparison sets exactly the same money side by side, and the Medicare part is shown separately as a cost with no benefit against it.
Sources worth opening
Your numbers stay in your browser. Nothing you enter is sent anywhere. Built by Elishav Rabinovich, an independent financial planner in Israel. עברית