20/11/2025
*New Tax Rules for Olim in 2026*
1. Zero Income Tax for First 2 Years (2026–2027)
Under the new reform, immigrants (olim hadashim) and returning residents who arrive in 2026 will pay 0% income tax on Israeli-sourced income in 2026 and 2027, up to a ceiling.
The income cap for this benefit is ₪ 1,000,000 per year.
After the zero-tax years, the rate phases in:
2028 → up to 10%
2029 → up to 20%
2030 → up to 30%
From 2031 onward, they would pay “normal” Israeli rates (i.e., like most residents) after they “age out” of the special benefit.
2. Continuation of Existing Foreign-Income Exemption
Olim will still be eligible for the 10-year exemption on foreign-source income, a well-known benefit.
Also, they retain existing “tax credit” (נקודות זיכוי) benefits that new immigrants usually get. Removal of the 10-Year Reporting Exemption (Starting Jan 1, 2026)
Under previous rules, new olim could not report (i.e., were exempt from reporting) their foreign income/assets during the 10-year foreign-income exemption. That is changing.
As of December 31, 2025, Amendment No. 272 to the Income Tax Ordinance comes into force: this gives the tax authority more power to demand information about foreign companies, assets, or income tied to a new immigrant.
Essentially: the tax-exemption remains for 10 years (for foreign income), but transparency requirements increase.
3. Who Is Eligible
The special 0%-tax benefit is for those who make Aliyah in 2026 (or returning residents who meet the criteria).
According to the Ministry of Finance / Aliyah & Integration Ministry, the reform is retroactive once it passes — meaning even people who make aliyah early in 2026 could qualify.
The reform targets not only “new olim” (never-Israel residents) but also “returning residents” who have lived abroad for more than 10 years.
4. Implications for People Arriving in 2025
If you make Aliyah in 2025, you do not benefit from the new 0%-tax scheme, because that’s explicitly for 2026 arrivals.
For 2025 olim, the existing 10-year exemption on foreign-source income continues to apply.
Importantly: the reporting exemption change (removal) applies for those arriving after January 1, 2026. So, 2025 olim may still fall under the older regime, depending on timing.
5. Strategic Considerations
If you're planning Aliyah, timing could matter a lot financially. Making Aliyah in 2026 gives access to the very generous two-year zero-tax benefit on Israeli income.
But with the new transparency rules, you need to plan carefully for your foreign assets/income. The tax authority will have more power to scrutinize foreign businesses or income sources.
It’s highly advisable to talk with a tax advisor / accountant before making Aliyah (or before the law is finalized) so you model different scenarios and understand trade-offs.
Thinking about making Aliyah?
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