Israeli Reserve Soldiers Face Loss of Property Tax Discount Amidst Delays by Interior Ministry

Reserve soldiers in Israel risk losing their eligibility for property tax discounts in 2026 due to delays by the Interior Ministry in formalizing the exemption rules. The exemption, which excludes reserve duty pay from income calculations for tax discount eligibility, was temporarily authorized for 2024-2025 following a Supreme Court petition by the Awakening Movement. However, this arrangement has not been extended for 2026, leaving many reservists uncertain about their continued benefits. Adir Schwartz, Deputy Mayor of Jerusalem and chairman of the Awakening Movement, urged Interior Ministry Director-General Israel Ozen to promptly resolve the issue, calling the current situation "absurd" as reservists may lose discounts despite their service sacrifices.

The Interior Ministry, controlled by the Shas party, has not provided clear guidance on the policy for 2026, apparently hindered by the absence of a serving minister after Shas ministers resigned from the government. Meanwhile, new data from the Treasury’s Chief Economist Office reveals that the recent property tax reform, led by the same ministry, has disproportionately benefited the ultra-Orthodox community. The reform increased the total cost of tax discounts by 49% to about 3.2 billion shekels, with eligibility rates rising to 65% among the ultra-Orthodox, who also receive the highest average discount of approximately 4,600 shekels per household.

The report highlights that weaker local authorities bear the brunt of lost revenue due to the reform, which does not condition discounts on employment status or income potential. Eligibility rates also increased in the Arab sector to 53% and among the middle class to 20%. The Interior Ministry stated that it sets the maximum discount rate, but local authorities decide the actual discount granted. This ongoing uncertainty and policy delay place reservists at risk of losing a key financial benefit tied to their service.