Tax Benefits for New Immigrants to Israel – Temporary Order to Encourage Aliyah

New immigrants who arrived in Israel in 2026 — there is a new temporary order that is important to know about.

Many assume the tax situation is the same as it was before. In practice, there is a significant difference, and those who are unaware of it may be surprised.

Let’s make sense of it.

New benefits for Olim expire on December 31, 2026. Anyone who does not become an Israeli resident by then will not be able to benefit from it

What Is the Temporary Order?

(Law for Encouraging Immigration to Israel and Return to Israel (Temporary Order), 5786-2026, published on March 31, 2026, as part of the Economic Efficiency Law for the 2026 state budget.)

The temporary order grants an income tax exemption on earned income in Israel under Sections 2(1) and 2(2) of the Income Tax Ordinance (employment income or business income), for new immigrants and veteran returning residents who became Israeli residents between November 5, 2025 and December 31, 2026.

The exemption is gradual, according to the tax year:

1. 2026 — up to ₪600,000 (pro rata based on the actual residency period).

2. 2027–2028 — up to ₪1,000,000.

3. 2029 — up to ₪350,000.

4. 2030 — up to ₪150,000.

In addition, income from a relative is also exempt, up to ₪140,000 per year, during 2026–2029.

What About the Existing Benefits?

The exemption on foreign-source income under Section 14 of the Income Tax Ordinance still exists. The capital gains tax exemption on the sale of foreign assets under Section 97 also still exists.

These benefits were not cancelled, and they are in addition to the new temporary order.

What Are the Potential Pitfalls?

1. Not All Income Qualifies

The exemption applies only to “qualifying income” — meaning earned income from employment or business (Sections 2(1) and 2(2) of the Ordinance).

“Other income,” as defined in Section 62A(d), is not included in the exemption.

2. Reporting Obligations Have Changed

The most significant change concerns reporting requirements.

Anyone who became an Israeli resident on or after January 1, 2026 is no longer exempt from reporting foreign assets and foreign income.

The reporting exemption that previously existed under Section 134B of the Ordinance was cancelled for anyone who immigrated in 2026 or later.

In other words: the tax exemption on foreign income under Section 14 still exists, but the obligation to report that income applies from day one.

3. The Benefit May Expire Automatically

The exemption may automatically lapse if you were physically present in Israel for fewer than 75 days during the 2028 or 2029 tax years (Section 4 of the law).

Bottom Line

If you moved to Israel in 2026 — or are considering immigrating before year-end — a professional review can help ensure that you maximize the benefit properly and avoid unexpected reporting obligations.

Important Reminder

This temporary order expires on December 31, 2026. Anyone who does not become an Israeli resident by then will not be able to benefit from it.