Israel's War Costs Top $60 Billion, Burdening Families

Nearly three years since the October 7, 2023, Hamas attacks, Israel's security expenses have surged, with the war costing the nation approximately 230 billion shekels (about $62 billion USD). This figure is equivalent to nearly two annual defense budgets during peacetime and represents over 10% of Israel's annual GDP. The largest portion of these expenses is allocated to the military, with defense spending projected to reach 166 billion shekels in 2025, a significant increase from 75 billion shekels in 2022. This includes 32 billion shekels for reserve duty and 11 billion for the rehabilitation department for disabled veterans and victims of hostilities.

The Property Tax Compensation Fund has paid out over 37 billion shekels for direct civilian damages since the war began, with only about 2.8 billion shekels remaining in its coffers, necessitating potential budget injections or debt for future needs. Direct and indirect damages from two separate military escalations with Iran amount to approximately 13 billion shekels, while the rehabilitation of the Gaza border region has incurred costs of around 17 billion shekels.

When divided among Israel's approximately 2.9 million households, the war's cost averages out to roughly 79,000 shekels per family, exceeding half a year's average salary. On a per capita basis, each citizen, including infants, bears a cost of about 23,000 shekels. This expenditure has diverted funds from essential services like infrastructure, healthcare, and education, with a portion to be financed through debt that families will repay with interest for years.

These figures represent incurred or committed expenses and do not account for impacts on economic growth, foreign investment, or credit rating downgrades. Future defense commitments, such as missile procurement and reserve duty funding, are also not yet included. The upcoming 2027 budget will require decisions on how to cover the deficit, potentially through tax increases, civilian budget cuts, or further national debt.