Israel to Cap Daily Commute Reimbursement at 22.60 Shekels in 2026

Starting in 2026, Israeli employees will be eligible for a daily commute reimbursement capped at 22.60 shekels per workday. This reimbursement applies regardless of the mode of transportation, including electric bicycles, scooters, private cars, or even walking, and is calculated based on the cheaper of either the subsidized public transport fare for the route or the monthly pass cost. Millions of workers across various sectors, from waitstaff to software engineers, are entitled to this benefit, which is legally considered part of employment costs rather than a personal expense.

The rationale behind the reimbursement is that commuting incurs costs, and employers are mandated to contribute. This contribution is standardized with a daily cap to ensure clarity and calculability across all workplaces. The rise of electric bikes and scooters as common commuting methods has prompted clarification on whether employees using these alternatives are still eligible, even if they no longer purchase public transport tickets.

The legal basis for this benefit is a general expansion order concerning employer participation in travel expenses. This order, initially agreed upon by employer and employee organizations, is extended by the Minister of Labor to cover all workers, regardless of their workplace's unionization status. The core principle is that employees are entitled to reimbursement for necessary travel to and from work, calculated based on public transport costs, irrespective of their chosen personal travel method.

Eligibility generally requires living at least 500 meters from the workplace, though exceptions exist for those with mobility issues. Part-time workers are also eligible, with reimbursement calculated based on actual days worked. The reimbursement is considered taxable income, subject to income tax, national insurance, and health tax deductions. In cases where public transport is unavailable, such as on Saturdays or holidays, employees are entitled to reimbursement for actual expenses up to the daily cap, even if they have a monthly pass. Construction workers traveling over 40 kilometers may receive a higher daily rate of up to 33.90 shekels.

Employees who are provided with organized transportation by their employer, take sick or vacation days, or live within a short walking distance are not eligible for the reimbursement. Common mistakes include assuming the benefit requires a public transport card or failing to claim it when using alternative transport. Employers are obligated to list this reimbursement as a separate item on payslips. Workers can claim the reimbursement by providing their employer with details of their commute, and if denied, can escalate the issue to the Ministry of Labor's enforcement division or file a claim in the regional labor court. Claims for travel reimbursement are subject to a seven-year statute of limitations.