Israeli Tax Authority Ends Tax Benefits for Yeshivas with Draft-Dodging Students

The Israeli Tax Authority announced over the weekend that dozens of yeshivas and Torah study institutions will no longer qualify for tax benefits that allow donors to receive tax credits if these institutions have students who have not regularized their status with the military authorities. This decision pertains to Section 46 of the Income Tax Ordinance, which permits donors to approved institutions to claim tax deductions for their contributions. Additional letters are expected to be sent to more yeshivas in the coming days.

The letters specify that according to the Tax Authority’s records, these institutions are either Torah study centers or organizations supporting such centers or their students. The authority cited existing law, Supreme Court rulings, and government decisions stating that benefits should not be granted directly or indirectly to encourage draft evasion. It emphasized that the state has no authority to promote draft evasion through public funding.

Following consultations with the government legal advisor Gali Baharav-Miara and relevant professional and legal bodies, it was determined that funding, including tax credits under Section 46, cannot indirectly support institutions where students have not complied with military service requirements. Institutions holding Section 46 approval must submit a signed declaration confirming that none of their students called for military service have failed to regularize their status, and that they will not admit such students. They must also provide a detailed list of current students with names and ID numbers in an Excel file.

This move follows a Supreme Court ruling and aims to enforce military service obligations uniformly. In response, Shas party leader Aryeh Deri criticized the decision, accusing the outgoing legal advisor of harshly targeting Torah students and warning it could lead to tax rebellion and deep societal rifts within the ultra-Orthodox community.