Israel · Tax regime
Income Law to Encourage Immigration and Return to Israel (2026 Window)
This measure is enacted, and it is time-limited. It passed within the Economic Efficiency Law (Book of Laws 3511) on 31 March 2026. Israel has historically taxed olim in full on ISRAELI-source income. This regime changes that, exempting Israeli-source active income up to a declining annual ceiling. The eligibility window runs from arrival or return between 5 November 2025 and 31 DECEMBER 2026. It closes in roughly five months. Veteran returning residents need 10+ years abroad to qualify.
This is the newest and least-understood item in the region, announced by the Finance Minister as a year of revolution in aliyah. But look closely at what it actually rewards: Israeli-source ACTIVE income, meaning salary and business profits. That is not the typical UHNW profile. For a family whose wealth is foreign and passive, this benefit is close to worthless. Meanwhile, the cost of arriving in 2026, the permanent loss of the reporting exemption under Amendment 272, falls squarely on their foreign asset base. The timing paradox is the whole point. Arriving in 2026 buys the new Israeli-income exemption but forfeits the reporting exemption. Arriving before 2026 was the reverse. You cannot have both, and for most UHNW clients the lost reporting exemption is worth more.
Qualifying routes
Israeli-source active income is exempt up to ILS 600,000.
The ceiling rises to ILS 1,000,000 for each of 2027 and 2028.
The ceiling falls to ILS 350,000.
The ceiling falls to ILS 150,000. After that, the regime expires.
Income from related parties is capped at ILS 140,000 per year.
The facts
- Minimum
- 600k ILS
- Total landed cost
- There is no cost to claim this. The benefit is a tax exemption, not an investment. The cost to the Israeli Treasury is estimated at roughly ILS 560m over five years.
- Route type
- Tax regime, not a visa
- Physical presence
- You must actually arrive and become an Israeli resident within the 5 November 2025 to 31 December 2026 window.
- Family
- Each individual qualifies in their own right, based on their own arrival date
- Permanent residency
- Not applicable. This is a tax regime attached to residency, almost always paired with the Law of Return.
- Citizenship
- Not applicable
- Language test
- Not applicable
- Dual citizenship
- Permitted
- Requirements
- Arrive or return between 5 November 2025 and 31 December 2026.Be a new immigrant, or a veteran returning resident who has lived abroad for 10 or more years.Income must be Israeli-source and active.
- Two conflicting ceiling schedules are circulating, and reputable firms have republished the SUPERSEDED DRAFT after enactment. The enacted schedule is 600k (2026) / 1m (2027) / 1m (2028) / 350k (2029) / 150k (2030). The draft, still appearing in circulation, had 1m/1m/600k/350k/150k. Confirm with Israeli counsel before advising. This is the number in this region most worth double-checking.
- The scope is narrow. It covers Israeli-source ACTIVE income only, meaning employment and business. Expressly EXCLUDED are interest, FX differences, dividends, rental income, asset sales, capital gains and real-estate gains. Income above the ceiling is taxed normally.
- Working from Israel for a foreign company may create a permanent establishment, which exposes the COMPANY's profits to Israeli tax. This can dwarf the personal benefit, and it is routinely missed.
- There is a trap in the acclimation-year option. An oleh may elect a one-year acclimation year (shnat histaglut) within 90 days of arrival, which defers Israeli tax residency by a year. Someone who made aliyah in 2025 and chooses this election becomes tax-resident in 2026. That puts them inside Amendment 272, and they lose the reporting exemption. The election that once bought time now costs confidentiality.
- The window closes 31 December 2026, and the 27 October 2026 Knesset election makes any extension politically unpredictable. Still, deadline pressure is not a reason to act. Model the trade-off for each family first.
- Separately, Amendment 262 to the National Insurance Law, enacted 25 February 2026, gives US olim a 5-year exemption from Israeli National Insurance on income already subject to US Social Security. It addresses the absence of a US–Israel totalization agreement. It does not cover health insurance contributions, and it applies to US nationals only.