An exempt dealer for a private tutor: what you need to know before you open

The short answer: most private tutors who are starting register as an exempt dealer, because their turnover is below the ceiling. According to Kol Zchut, the ceiling for 2026 is an annual turnover (not profit) of NIS 122,833. An exempt dealer does not charge VAT, but must give a receipt for every payment, and still pays income tax and National Insurance. There is an important exception for someone who teaches groups of 5 students and more.

The information is correct as of October 2026, checked against "Kol Zchut" and linked to Tax Authority pages. This is general information and not tax advice: check your own situation with an accountant or a tax adviser.

Who can be an exempt dealer and what the ceiling is this year

An exempt dealer is a VAT status. It suits a small business whose annual turnover does not pass the ceiling:

The updated amounts are also published on the Tax Authority page VAT amounts and rates.

Note: this is about turnover, that is everything the parents paid you, before expenses. A tutor who teaches 15 hours a week at NIS 150 an hour (illustrative numbers), over 40 weeks, reaches NIS 90,000 a year. If your numbers are approaching the ceiling, it is worth tracking every month and not discovering it in December.

The exception for someone who teaches groups

According to Kol Zchut, there are occupations that cannot be an exempt dealer at all, regardless of turnover. Among them: the owner of a school where professional, theoretical or practical instruction is given "to groups in each of which there are at least 5 students", except in the case of up to 30 days of instruction a year.

In practice: a tutor who teaches individual lessons or small groups of 2-4 students usually does not touch this exception. A tutor who runs a class or groups of 5 and more on a regular basis should check with an accountant before registering as exempt.

An exempt dealer, a licensed dealer and a small business owner

Three terms that sound similar and are often confused:

What is a "small business owner"

This is an income tax reform that began in 2024. According to Kol Zchut (updated 2.6.2026), a small business owner is a self-employed person whose annual business turnover does not exceed NIS 122,833 (as of 2026). Instead of submitting receipts for expenses, they deduct 30% of the income as expenses, regardless of actual expenses, and can submit a shortened annual report online.

There are conditions. According to the same source, the status does not apply, among others, to a business that employs workers, that does not keep books as required, or part of whose income comes from the person who employs them as an employee. Whoever does not report the actual turnover by 31 March of the following year moves to the regular status.

For a private tutor with few expenses (no room rent, no expensive equipment), a fixed 30% can be simpler than collecting receipts. For a tutor who rents a room or a studio, the actual expenses may be higher. This is exactly the question for an accountant. Official details: small business owner on the Tax Authority website.

Income tax and National Insurance

The exemption of an exempt dealer is for VAT only. According to Kol Zchut, it "does not release from the duty to pay income tax and National Insurance". That means:

• VAT: you open a file before you start the activity. A dealer who is eligible to be exempt can register online, without going to an office.
• Income tax: you open a file there too, and report the income.
• National Insurance: according to the National Insurance website, someone who starts working as self-employed must report it as soon as the work begins. When you open a file online at the Tax Authority, you can tick that a National Insurance file will be opened too.

The annual VAT report: an exempt dealer reports to VAT once a year, by 31 January, on the turnover of the previous year. According to Kol Zchut, the report for 2025 was postponed to 30.4.2026.

A tutor who is also an employee (for example, a school teacher who gives private lessons in the afternoon) needs to pay attention to tax coordination too. That is also a question for an accountant.

A receipt for parents: when and how

According to Kol Zchut:

• An exempt dealer cannot issue a tax invoice.
• When asking for payment, you can issue a transaction invoice, which is a payment request.
• When you receive the money, you must issue a receipt immediately.

That is: every payment from a parent, in cash, by transfer or by a payment app, needs a receipt. You issue it in a program or an app for issuing receipts. Teaching does not issue receipts or invoices to parents. The invoice that Teaching issues is only for your subscription to the system.

Tracking the ceiling during the year

A tutor who starts in September with five students and ends the year with twenty can discover that the turnover jumped without noticing. The simple way: once a month, add up how much you received since the beginning of the calendar year, and compare it to the ceiling.

An example (illustrative numbers only):

In such a case the turnover is still below NIS 122,833, but close. If next year the pace of the autumn continues all year, it will pass the ceiling. That is the time to sit with an accountant before it happens, and not after, and to check what moving to a licensed dealer means in your case.

Documenting income: why recording lessons helps

Receipts show what you received. But to know how much is owed to you, who has not yet paid, and when you are approaching the ceiling, you need a record of the lessons themselves.

In Teaching every lesson is recorded with a date, a student and a rate, and every payment is marked with a date. From this you can:

• See in the history, with a filter by month, how much was paid and how much was not paid for each student.
• Export to Excel all the lessons: date, time, student, parent, type, rate, status and payment date.
• Compare the receipts you issued to the lessons that were paid, and find a payment that did not receive a receipt.

Important: the export is a tracking tool, not a tax report. It helps you and your accountant to see the picture, but the report itself is made according to the Tax Authority rules. If you still work in manual Excel, see tracking student payments in Excel, and on the difference between payment in advance and payment at the end of the month: payment for private lessons.

Starting from zero? The full guide is in how to become a private tutor.

Written by the Teaching team · Updated on 14 October 2026. The information on VAT, income tax and National Insurance was checked against "Kol Zchut" and the National Insurance website in October 2026, and is not tax advice. Check your own situation with an accountant.