Israel Faces Surge in High-Earning Emigration Impacting Tax Revenues

In 2024, Israelis who emigrated paid 1.2 billion shekels in taxes the year before leaving, more than doubling from about 500 million shekels annually before 2019, according to a report by Israel's Tax Authority's Planning and Economics Division. The report highlights a 50% rise in the number of emigrants since before the COVID-19 pandemic, but a 150% increase in lost tax revenue, indicating that more high-income individuals are leaving the country.

The number of emigrants who lived in Israel for at least three years before leaving rose from about 40,000 annually before 2019 to 60,800 in 2023 and 56,300 in 2024. While overall emigration slightly declined in 2024 compared to 2023, the number of taxpayers emigrating aged 20 and above continued to grow. The most significant increase occurred among 40-50-year-olds, a key career stage, with emigration rates rising from 0.4% pre-pandemic to nearly 0.7% in 2024, a 60% jump. This group’s income before leaving tripled from roughly 900 million to 2.7 billion shekels annually, and their share of total emigrants over 20 rose from 13% a decade ago to 20% in 2024.

In contrast, emigration rates among 20-30-year-olds remained stable at about 1% annually for the past decade. The report also shows an 80% increase in emigration rates among the top income decile, while lower income groups saw no rise or even a decline. The top decile accounts for approximately 86% of lost tax revenue from emigrants. Sector-wise, emigration from high-tech jobs surged by 150%, and from healthcare by over 100%, whereas education and industry saw little change.

Additionally, emigrants’ average income now exceeds the national average by about 50%, and the number declaring transfers of over half a million shekels abroad quadrupled among emigrants between 2023 and 2024. The timing of this trend is notable: stable data until 2021, with increases beginning in 2022 and accelerating in 2023-2024. The report suggests two possible causes: societal and labor market changes post-COVID-19, or reactions to political and security turmoil in Israel since early 2023, without drawing a definitive conclusion.

The Tax Authority warns that if this trend continues, Israel could lose about 3.5 billion shekels in tax revenue over five years, averaging 700 million shekels annually from emigrants. The report describes the situation as "concerning" and issues a cautionary note about the fiscal impact of losing high-earning professionals such as tech workers and doctors.