Israel Sees 12% Tax Revenue Surge in July to 53.3 Billion Shekels

Israel's state treasury recorded a significant increase in tax revenues in July 2026, reaching 53.3 billion shekels, a real rise of approximately 12% compared to July 2025. According to data from the Ministry of Finance's Chief Economist and Accountant General, tax revenues from January to July rose by 10% in real terms. Despite this growth, the cumulative deficit over the past 12 months remained steady at 3.3% of GDP, about 72.9 billion shekels. The monthly deficit for July alone was around 4.8 billion shekels, similar to the previous year, but the year-to-date deficit dropped dramatically to approximately 11.5 billion shekels from 37.2 billion shekels in the same period last year.

The Ministry of Finance attributes the tax revenue surge to several key factors. Direct taxes increased by 14%, driven mainly by higher deductions from wages and a 21% jump in income tax collected from self-employed individuals, compared to a modest 3% rise from corporations. Capital market taxes also surged by 21% in July, with a cumulative 79% increase in securities deductions since the start of the year. Indirect taxes grew by 9%, linked to a significant rise in private consumption during May and June and a large single VAT transaction. The Ministry noted that July 2025's lower tax base, due to reduced activity during the "With the Lion" war, partly explains the sharp increase this year.

On the expenditure side, government spending from January to July totaled 373.6 billion shekels, a modest 3.5% increase compared to the same period last year, below the planned 7.4% budget growth. However, the Accountant General expects spending growth to accelerate in the coming months. Notably, defense spending rose sharply by 12.6%, while civilian ministries' expenditures declined by 1.3%. Additionally, compensation fund payments since the start of the year are estimated at about 8.8 billion shekels.