Tax benefits for New immigrants and Returning Residents

New draft law amendment has been published, introducing the temporary tax benefit aimed at encouraging new immigrants and veteran returning residents to move to Israel during 2026. Under the current version of the draft law, individuals who become Israeli residents in 2026 will receive a 5-year exemption (2026–2030) on employment and active business income generated in Israel, up to an annual cap that gradually decreases over the five-year period:

• 2026–2027: Exemption up to ₪1,000,000 per year
• 2028: Up to ₪600,000
• 2029: Up to ₪350,000
• 2030: Up to ₪150,000

 Income above these thresholds will be taxed under the standard tax brackets, with all regular benefits for new immigrants and returning residents remaining in place. The exemption for 2026 will be pro-rated based on the time spent as an Israeli resident during that year. The draft law defines eligibility as follows:

• The new immigrant should have an Oleh certificate or Oleh visa or is otherwise entitled to the absorption basket (Sal Klita).
• A veteran returning resident must hold an official Returning Resident Certificate issued by the Ministry of Aliyah and Integration.

The amendment is structured as a temporary measure intended to support individuals relocating to Israel in the near term, particularly in light of rising global antisemitism, and to incentivize the establishment of economic activity in Israel.

This article does not constitute a substitute for professional advice