Israel Offers Full Income Tax Exemption for Returning Citizens and New Immigrants

Israel is introducing a special, temporary tax order offering a full income tax exemption on earned income for returning residents and new immigrants. This unprecedented benefit, a collaboration between the Tax Authority and the Ministry of Aliyah and Integration, aims to encourage individuals to move their center of life to Israel. The exemption applies to earned income up to NIS 600,000 in the first year, and up to NIS 1 million in each of the following two years, with cumulative income ceilings reaching NIS 3.1 million over five years. For example, a returning resident earning NIS 30,000 monthly would save tens of thousands of shekels annually.

The window for this tax benefit is limited, requiring individuals to have made aliyah or returned to Israel between November 2025 and December 31, 2026. To qualify, official documentation from the Ministry of Aliyah and Integration is necessary. The Tax Authority has imposed restrictions, notably a reduced exemption ceiling of NIS 140,000 if the income is from a relative, and requires proof of severed ties to the previous country of residence and establishment of a center of life in Israel.

This tax incentive is part of a broader effort to boost immigration, which saw over 27,000 new immigrants arrive in Israel in the past year despite security challenges. The order is set to expire at the end of 2026, after which returning individuals will revert to the standard tax regulations. Those planning a return should complete their registration with the relevant ministries before the deadline to secure their eligibility.

This special order complements other tax benefits recently approved, including tax credits for residents of certain security-threatened communities in Judea and Samaria, effective January 2026. Additionally, the Tax Authority has advanced the payment of the work grant (negative income tax) to low-income workers to help with rising expenses.