Israel Faces Sharp Tax Revenue Loss as Wealthy Residents Leave in Growing Numbers

The number of Israelis leaving the country has surged by about 50%, with a significant rise among high earners, particularly in high-tech, healthcare, and the 40-50 age group. This trend has led to a potential annual tax revenue loss of 1.2 billion shekels, according to a recent study. Between 2015 and 2019, around 50,000 people left Israel annually, with about 40,000 having lived in the country for at least three years before departing. After a dip during the COVID-19 pandemic, departures increased to approximately 61,000 in 2023 and 56,000 in 2024.

Despite the moderate rise in the number of emigrants, the tax revenue loss has escalated sharply, with an additional 700 million shekels lost per new cohort of emigrants each year. If this trend continues for five years, the cumulative loss could reach 3.5 billion shekels annually. However, this figure does not necessarily represent an immediate or total loss, as tax residency is determined retrospectively, and some emigrants continue paying taxes in Israel after leaving.

The average annual income of those leaving has also increased substantially, from about 125,000 shekels (adjusted to 2024 prices) in 2015-2019 to 200,000 shekels in 2024, a real increase of roughly 60%. Previously, emigrants’ incomes were similar to the national average, but now they exceed it by about 50%. The departure rate among the top income decile rose from 0.3% before the pandemic to over 0.5% in 2024, an 80% increase, while rates among lower income groups remained stable or declined.

Sectoral data show a 150% increase in departures from the high-tech industry and over 100% in healthcare professions, including doctors and other high-salary roles. In contrast, sectors with lower wages, such as education and manufacturing, saw minimal changes. The study also highlights a doubling in the number of people reporting transfers of over half a million shekels abroad in 2023-2024, with a fourfold increase among those emigrating. These figures mainly reflect self-employed and high-income individuals and may partly indicate strategies for risk diversification and holding assets abroad.

The Israeli Tax Authority notes that while the number of such reports remains in the hundreds, the sharp increase and changing emigrant profile underscore a growing trend of wealthy, skilled workers and key taxpayers leaving Israel in recent years.