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The Israel Tax Authority, the Ministry of Finance, and the Ministry of Aliyah and Absorption have announced an upcoming income tax reform for Olim.
Summary of the key details:
Two-year 0% income tax: New Olim and Toshavim Chozrim Vatikim (who have lived abroad for over 10 years) who move to Israel in 2026 will receive a 0% income tax rate for their first two years of residency.
Income cap: The 0% tax rate applies to annual incomes up to ₪1 million.
Phase-in plan: The tax rate will gradually increase after the initial two years: to 10% in 2028, 20% in 2029, and 30% by 2030.
Existing benefits continue: This new reform complements existing benefits, such as the 10-year exemption on foreign income.
Eligibility: The reform applies to new immigrants and returning residents who have lived abroad for at least 10 years.
**The plan is subject to Knesset approval in the near future.