Tax Package 2026: The Knesset Considers the Cost of Aliyah and Debates the Fairness of Benefits

The Financial Committee of the Knesset has moved to the practical phase of discussing the reform that will directly affect future immigrants. It concerns tax relief for those who will arrive in Israel in 2026, and the cost of the issue for the budget.

The amount has already been named: 560 million shekels over five years. Politicians are simultaneously debating the mechanics of the benefit and who exactly should receive it.

What exactly is proposed to change

Today, a new immigrant receives from one to three tax units for approximately four and a half years after arrival. In monetary terms, this is about 3–9 thousand shekels per year, depending on the situation.

There is also another, more sensitive norm: exemption from Israeli taxation of income earned abroad for ten years. This applies to salaries, businesses, dividends, assets, even those purchased after relocation.

From 2026, the system changes — income will need to be declared.

Gradual tax return scale

The government proposes not to cut the benefit immediately but to introduce it gradually.

In 2028, taxation may reach 10 percent.
In 2029 — up to 20.
In 2030 — up to 30.

And starting from 2031, a transition to the general rules applicable to all citizens is expected.

Who they want to include additionally

During the meetings, deputies raised a politically sensitive question: whether to extend the package to those who arrived after October 7 but do not formally fall under the new date.

This is no longer just accounting. It’s a conversation about the state’s trust in people who decided to relocate during an extraordinary period.

Such nuances are usually carefully analyzed by economic editors, including journalists from the platform NANews — News of Israel | Nikk.Agency, because they show how the philosophy of absorption itself is changing.

Exemption ceiling for those arriving in 2026

If the plan is approved, new immigrants arriving in 2026 will be able to avoid paying tax on foreign income within certain amounts.

In 2026 and 2027 — up to one million shekels.
In 2028 — up to 600 thousand.
In 2029 — up to 350 thousand.
In 2030 — up to 150 thousand.

Afterwards — the standard system.

Similar rules are proposed for returning citizens.

Where criticism arises

An unexpected argument was voiced in the discussion. In the first year or two after arrival, most people physically cannot take advantage of the benefit: ulpan, side jobs, temporary employment, low income.

The tax benefit is felt significantly later — when a person is already integrated into the labor market.

Hence the idea to change the logic: let the size of the assistance increase over time, rather than decrease.

Economic calculation of the ministry

According to relevant departments, annually about 10–12 thousand people enter the market a year after aliyah. The average salary is about 8 thousand shekels per month.

The Ministry of Absorption believes: if additional incentives add at least three thousand workers a year, the economy can gain from one billion to one and a half billion shekels in growth.

In other words, the state is essentially investing in future taxpayers.

What’s next

The reform is not yet closed. The final version should be included in the economic regulation law for 2026 and pass along with the budget.

Until then, parameters may change, and the list of recipients may expand or, conversely, narrow.

But the main conclusion is already clear: the issue of aliyah has once again become part of the country’s large financial strategy, not just social policy.