Smotrich proposes expanding tax break for new immigrants

Minister of Finance Bezalel Smotrich revealed at the conference of the Tax Advisors Association last night that he intended to encourage immigration to Israel through a tax exemption for new immigrants on income arising in Israel. At present, there is a ten-year exemption for new immigrants on income arising outside of Israel, but not for income arising in Israel.

“We shall encourage aliya (Jewish immigration) by means of dramatic tax benefits. This will bring a great deal of human capital and financial capital. At present, a new immigrant receives an exemption for ten years on income arising overseas, so he leaves the money overseas,” Smotrich said. “The aim is that he should bring the money here, and the economy will thereby gain. There is no cost to us, because the money isn’t here.”

On January 1, 2026, the ten-year exemption for new immigrants and returning residents from reporting overseas income will be cancelled, although the exemption from taxation on overseas income will remain.

Smotrich’s announcement of a plan to grant an exemption from taxation to new immigrants on income in Israel too is opposed to the stance expressed by heads of the Israel Tax Authority in recent years, demanding that the exemption for new immigrants should be cancelled altogether.

Sources at the Tax Authority told “Globes”, however, that if the minister initiates an ad hoc measure granting a temporary tax exemption to anyone who immigrates to Israel up to the end of 2026, the Authority will support the move, since at stake is an opportunity to bring to Israel Jews from Western countries who are suffering from antisemitism, and to bring capital to the country.

Smotrich also declared that he planned to cut taxes, but provided no details. The assessment at the Ministry of Finance is that the main step on the agenda is cancellation of the freezing of income tax brackets. In the austerity measures introduced to finance the war, the Ministry of Finance froze the annual revision of income tax brackets until 2027 (inclusive). If the freeze is cancelled in 2026, some workers will fall to a lower tax bracket and pay a lower rate of income tax.

Smotrich also commented on the housing plan approved by the government yesterday. “The plan will mainly get underway next year, and will support expansion of the supply of housing by tens of thousands of units,” he said.

Smotrich added words of advice to homebuyers: “Don’t be suckers,” he said. “Bargain with the contractors. Bring prices down. They have a great deal of room to lower prices. Don’t rush to buy. There will be no shortage of supply in the coming years, and there is no reason to allow the contractors to keep raising prices more and more. No-one should think that after the war the national mood is improving, interest rates will fall, and there will be a rush on housing that will enable the contractors to raise prices again.”

Tax reporting puts potential immigrants under pressure

Treasury again takes aim at advanced training funds

Smotrich also spoke about the defense budget, saying, “The defense establishment will have to become more efficient and come within a reasonable budget. It will still be higher than before the war, and will probably remain so in the coming years, but things cannot continue as they were in the past two years, during which the defense establishment received an open check with almost no limitations. It will have to get back to normal numbers.”

Published by Globes, Israel business news – en.globes.co.il – on October 27, 2025.

Source link