Israel is launching a major new tax benefit for new immigrants and veteran returning residents, offering a powerful financial incentive aimed at encouraging aliyah and easing their first years in the country.
Under the reform, eligible newcomers will receive a gradual exemption from income tax for up to five years from the date they immigrate or return to Israel. The benefit will be added to existing assistance packages and will not cancel current benefits, including tax credit points and the 10-year exemption on foreign-source income.
Those eligible include new immigrants and returning residents who spent at least 10 years abroad and immigrate or return to Israel between November 5, 2025, and the end of 2026.
The benefit applies to earned income in Israel, including salaries and self-employed business income, during the 2026-2030 tax years. It does not apply to passive income such as rent, accrued interest or dividends.
The exemption caps are up to 600,000 shekels in 2026; up to 1 million shekels in each of the years 2027 and 2028; up to 350,000 shekels in 2029; and up to 150,000 shekels in 2030. For those employed by a relative, the exemption will be limited to 140,000 shekels per year. The original proposal did not include a benefit in such cases, but the committee revised the clause.
The reform also includes an anti-abuse mechanism meant to prevent people from moving to Israel solely to receive the tax break before leaving. Those who leave Israel and cease to be residents in 2028 or 2029, while spending fewer than 75 days in the country in those years, will not be covered by the reform.
Existing benefits will remain in place, including one to three tax credit points for about 4.5 years, worth roughly 3,000 to 9,000 shekels per year, and a 10-year exemption from tax on income earned outside Israel. Beginning in 2026, however, foreign-source income must be reported.
The measure is meant to send a clear message to Jews considering aliyah: Israel wants to make the move financially easier, provide a stronger landing pad for newcomers and help them integrate quickly into the Israeli labor market.
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First published: 13:07, 04.27.26