Tax Authority Report Reveals Sharp Rise in Wealthy Israelis Leaving the Country

A new study by the Israeli Tax Authority's Planning and Economics Division reveals a significant increase in the number of wealthy Israelis emigrating between 2015 and 2024. The research shows that not only has the overall number of Israelis leaving the country grown by about 50% since before the COVID-19 pandemic, but the economic profile of these emigrants has shifted markedly towards higher earners, particularly those working in high-tech and healthcare sectors, as well as individuals in their peak career years.

According to the study, income tax paid by emigrants in the year before leaving surged from approximately 500 million shekels annually before 2019 to around 1.2 billion shekels in 2023 and 2024. This represents a potential tax revenue loss of about 700 million shekels per new cohort of emigrants. However, the Tax Authority notes that some emigrants may still be considered tax residents or continue paying taxes in Israel after departure, with residency status determined on a case-by-case basis.

The data highlights that the emigration increase is concentrated among the top income decile, where the departure rate rose from 0.3% to over 0.5% in 2024, an 80% jump. This group accounts for 67% of emigrants' total income and 86% of their income tax payments before leaving. Average annual income of emigrants rose from about 125,000 shekels in 2015-2019 to 200,000 shekels in 2024, now 50% above the national average. Emigration among 40-50-year-olds increased by 60%, with their total income before leaving tripling to 2.7 billion shekels and their tax payments rising by 165%.

The study also notes a 150% rise in emigrants from the high-tech sector and a doubling from healthcare, while lower-wage sectors like education and industry saw little change. Additionally, there was a fourfold increase in Israelis reporting transfers of over half a million shekels abroad, especially among emigrants, suggesting a trend toward asset diversification outside Israel. The researchers caution that these figures represent only those who report such transfers and recommend ongoing monitoring.

For the study, emigrants were defined as citizens residing outside Israel for at least 90 consecutive days in the departure year and over 270 days the following year, having lived in Israel for at least three years prior. This definition differs from tax residency criteria. The researchers suggest that the rise in wealthy emigrants may relate to labor market changes post-pandemic or responses to political and security developments since early 2023.