Israel unveils unprecedented incentives to new immigrants

Aliyah Boost – New Israeli tax reform offers immigrants 0% income tax for up to five years in a bid to encourage more immigration from industrialized countries.

By World Israel News Staff

Israel is offering new immigrants and veteran returning residents a major new income tax exemption in a bid to encourage aliyah and make relocation financially easier.

Under the reform, eligible immigrants and returning residents who arrive in Israel between November 5, 2025, and the end of 2026 can receive a tax exemption on Israeli-earned income for up to five years.

The benefit applies to income from work or business activity in Israel, not passive income such as rent, dividends or interest.

The exemption is capped by year: up to NIS 600,000 ($201,250) in 2026, up to NIS 1 million ($335,420) annually in 2027 and 2028, up to NIS 350,000 ($117,400) in 2029 and up to NIS 150,000 ($50,310) in 2030.

The Ministry of Aliyah and Integration said the reform is meant to provide “significant financial relief” and help new arrivals integrate into Israel’s economy.

The new tax break is in addition to existing benefits, including tax credit points and the 10-year exemption on foreign-source income.

That exemption will remain in place, though new immigrants and veteran returning residents will be required to report foreign income and assets beginning in 2026.

The benefit also applies to veteran returning residents, defined as Israelis who lived abroad for at least 10 years before returning to Israel.

The reform includes anti-abuse restrictions. People who leave Israel in 2028 or 2029 and spend fewer than 75 days in the country during those years will not be eligible for the benefit. Income from a related party is also subject to a lower cap of NIS 140,000 a year through 2029.

The measure was approved by the Knesset as part of broader budget legislation, after earlier discussion in the Finance Committee.

Yedioth Ahronoth reported that the cost of the benefit is expected to reach about half a billion shekels this year.