Israel Approves Tax Breaks for West Bank Settlers, Delays Northern Residents' Benefits

While tax benefits for residents of Judea and Samaria were swiftly approved and implemented, a promised tax break for residents of northern Israel has been significantly delayed, with implementation now contingent on the next government. The Finance Ministry had initially planned a 7% tax reduction for West Bank settlers, retroactive to January 2026, which was approved by the Knesset in early June and implemented within a month.

In parallel, a 3% tax break, estimated at around 300 shekels per month per household, was promised to residents of northern Israel as part of the "Tnuva LaTzafon" (Thrust to the North) program. This initiative aimed to incentivize residents to return home after the war and encourage new settlement in the region, which has seen tens of thousands displaced. The benefit was slated to be effective retroactively by the end of 2026.

However, unlike the West Bank benefits, the legislation for the northern residents has not progressed. Officials from the Finance Ministry attribute the delay to the inability to pass the necessary legislation before the upcoming elections, pushing the implementation to the next government. While the funds have been allocated in the state budget for future years, ensuring retroactive payment, past instances of unfulfilled government decisions raise concerns about whether the promised funds will materialize.

Sources familiar with the matter express frustration, suggesting a lack of political will and bureaucratic hurdles are responsible for the stalled legislation. They argue that even if immediate passage is impossible, the Tax Authority could have prepared the legislation in advance for swift approval by a new government. "It's a stupid bureaucratic issue," one source stated, emphasizing that northern residents deserve to receive the promises made to them.

Nissan Zvi, a northern resident and candidate for the Bayit Yehudi party, criticized the government, stating, "The government reminds us time and again that it has lost its way." He claimed that 300 million shekels intended for the northern front-line communities were diverted for political purposes and advocated for a dedicated law to secure funding and implementation for the region.

The Finance Ministry responded that the tax benefit increase for the North "will be implemented when the legislation can be carried out. In any case, the budget for a five-year interim order is preserved for this matter for the residents of the North."