Israel's War Costs Soar to $62 Billion, Future Spending Adds Billions More

Israel's financial burden from the ongoing conflict has reached approximately 231.4 billion shekels (about $62 billion) by the end of 2025, according to financial reports. Defense expenditures alone accounted for a significant portion, totaling around 166 billion shekels in 2025, a slight decrease from the 2024 peak of 168 billion shekels, and a substantial increase from the 98 billion shekels spent in 2023. These defense costs represented about 7.8% of the country's GDP in 2025.

Beyond direct defense spending, the war has also driven up rehabilitation costs. Payments to disabled veterans, bereaved families, and other eligible individuals reached about 11 billion shekels in 2025, up from 7 billion shekels in 2023. Of this, 8.7 billion shekels were allocated to disabled veterans and 2.3 billion shekels to bereaved families. Additionally, war-related damages resulted in 8.8 billion shekels in payments through the Tax Authority, and 13.2 billion shekels were directed towards various civilian expenses including housing, health, and infrastructure.

The government's overall debt has also climbed, reaching approximately 1.416 trillion shekels by the end of 2025, a 6.5% increase from the previous year. The Ministry of Finance attributes this rise primarily to the high funding needs stemming from the war, with the state raising about 207 billion shekels in gross debt during the year.

Looking ahead, the Ministry of Defense has already committed to future spending exceeding 67 billion shekels for major procurement deals. These include outstanding payments for F-35 fighter jets (24.5 billion shekels for one deal, 8.1 billion for another, and 16.3 billion for F-15s), Dakar-class submarines (6.9 billion shekels), helicopters (6.1 billion shekels), and refueling aircraft (5.3 billion shekels). Further commitments include 7.45 billion shekels for ground munitions and 3.3 billion shekels for air munitions from the US.

Long-term infrastructure projects within the defense establishment also carry significant costs, with billions allocated to a new intelligence base in the Negev (11.3 billion shekels), a unified logistics center (6.2 billion shekels), a cyber warfare base (4.3 billion shekels), and the 'Ofek Rahav' project (4.2 billion shekels). Some of these procurement and infrastructure deals predate the October 7th conflict, but many were initiated or expanded afterward. The Ministry of Finance warns that these substantial acquisitions will continue to generate ongoing maintenance and additional expenses in the years to come, even after active combat ceases.