Israel Offers New Tax Breaks for Returning Citizens in 2026
Israel is introducing a new, temporary tax incentive program for citizens returning to the country, set to begin in 2026. This "encouragement of immigration to Israel and return to it" law will exempt individuals from income tax on earnings generated within Israel. The window for eligibility is narrow, open only to those who make Aliyah or return between November 2025 and the end of the 2026 tax year. Those arriving in 2027 or later will only be eligible for the standard benefits offered to returning residents, which differ significantly.
The tax exemption has specific income ceilings that vary by tax year. In 2026, the ceiling is NIS 600,000, rising to NIS 1 million for 2027 and 2028, then dropping to NIS 350,000 in 2029 and NIS 150,000 in 2030. A separate, much lower ceiling of NIS 140,000 per year applies to income received from close relatives, valid from 2026 to 2029. The total potential exemption over the five-year period (2026-2030) amounts to NIS 3.1 million in eligible income, with the most substantial benefits concentrated in 2027 and 2028.
This new law targets income earned within Israel, such as salaries from Israeli employers or business income generated locally. This contrasts with the existing benefits for veteran returning residents, which primarily focus on income sourced from abroad. The eligibility criteria require applicants to obtain a returning resident certificate from the Ministry of Aliyah and Integration or an oleh visa under the Law of Return. The application process involves submitting an online form up to six months before returning, with an initial response typically provided within two weeks.
Beyond tax benefits, the law also addresses healthcare access. There is a waiting period for health services calculated based on the duration of absence from Israel, capped at six months. This waiting period can be waived by paying a fee, with reduced waiting times for those who have continuously paid health insurance abroad. New immigrants and certain other groups are exempt from this waiting period. Additionally, returning residents may be eligible for customs duty exemptions on imported goods for a limited time after their return.
