Israel Sees Sharp Rise in Wealthy Professionals Leaving, Tax Revenue Losses Soar

A new study by the Tax Authority's Planning and Economics Division reveals a dramatic shift in Israeli emigration patterns since the COVID-19 pandemic and recent regional conflicts. Between 2015 and 2019, about 50,000 Israelis left annually, mostly stable across income groups. However, since the pandemic ended, the number of emigrants has increased by roughly 50%, reaching 55,000 to 60,000 per year, with a significant rise among affluent professionals, especially in high-tech and healthcare sectors.

The average annual income of those leaving rose by about 60% in real terms from 125,000 shekels before 2020 to 200,000 shekels in 2024. Consequently, the state's annual tax revenue loss due to emigration surged from approximately 500 million shekels in 2015 to 1.2 billion shekels in 2023 and 2024, a 150% increase. Researchers warn that if this trend continues, annual tax losses could reach 3.5 billion shekels within five years.

The demographic shift shows a growing share of emigrants aged 40 to 50, whose emigration rate jumped by 60% in 2024, while younger groups remained stable. This age group contributes disproportionately to tax losses due to higher incomes. Additionally, emigration from the top income decile increased by 80%, accounting for 67% of emigrants' total income and 86% of tax losses. In contrast, emigration rates among the lowest income third slightly declined.

Sector-wise, departures from the high-tech industry rose by 150%, and healthcare professionals, including doctors, saw over 100% growth in emigration in the past two years. No significant changes were noted in education or manufacturing sectors. The study also highlights a doubling of individuals reporting overseas financial transfers exceeding half a million shekels, indicating capital flight.

Researchers note it is unclear whether these changes stem primarily from COVID-19's impact on the labor market and society or from the political and security tensions since early 2023. Regardless, the data clearly indicate Israel is gradually losing a growing portion of its highest-earning taxpayers, significantly affecting the national economy.