Tax-Free on Up to NIS 1,000,000 a Year, If You Make Aliyah by the End of 2026
In March 2026, the Knesset passed a new law that gives new olim and veteran returning residents something that didn't exist before: an income tax exemption on income earned inside Israel itself, not just on income from abroad. In plain terms, if you make aliyah at the right time, you may legally pay no tax on a large chunk of your salary or business income.
The catch: there's a deadline. Miss it, and this benefit isn't available to you.
Deadline: you need to make aliyah or return to Israel by December 31, 2026.
Who qualifies
- New olim, and veteran returning residents (lived abroad at least 10 years)
- Who arrive or return between November 5, 2025 and December 31, 2026
What's covered, and what isn't
The exemption applies to income from personal effort earned in Israel: salary from employment, or business/self-employment income. It does not apply to passive income such as rent, interest or dividends.
How much, and in which year
The exemption is a ceiling that steps down over time, based on the tax year itself (not the year you made aliyah):
| Tax year | Exemption ceiling |
|---|---|
| 2026 | Up to NIS 600,000, pro rata from your arrival date |
| 2027 | Up to NIS 1,000,000 |
| 2028 | Up to NIS 1,000,000 |
| 2029 | Up to NIS 350,000 |
| 2030 | Up to NIS 150,000 |
2026 is pro-rated. NIS 600,000 is the ceiling for a full year. If you arrive during 2026, your 2026 ceiling is cut in proportion to the part of the year you're a resident: NIS 600,000 × (days from your arrival to December 31) ÷ 365. Arrive on July 1, 2026, and your 2026 ceiling is about NIS 300,000. Arrived between November 5 and December 31, 2025? Then you're a resident for all of 2026 and get the full NIS 600,000. From 2027 on, the full ceiling applies each year.
Note: if your employer is a family member, the ceiling drops to NIS 140,000 a year (2026–2029).
A quick example
A software engineer makes aliyah on July 1, 2026 and starts working in Israeli hi-tech at NIS 30,000 a month. In 2026 that's about NIS 180,000, within the pro-rated 2026 ceiling (about NIS 300,000). In 2027 it's about NIS 360,000, within the 2027 ceiling (up to NIS 1,000,000). Result: zero income tax on that salary, in both years.
The fine print: don't make aliyah and run
There's an anti-abuse mechanism. If you leave Israel and cease to be a resident during 2028 or 2029, and spend fewer than 75 days in Israel that year, you lose the entire benefit, retroactively from year one.
This doesn't cancel what already exists
This new benefit stacks on top of the existing ones: the 10-year exemption on foreign-source income still stands, and so do tax credit points (worth roughly NIS 3,000–9,000 a year, for about 4.5 years).
One more thing worth knowing: olim arriving from January 1, 2026 onward must report foreign-earned income, even the portion that's tax-exempt.
If you're weighing when to make aliyah, timing just became a real financial decision, not just an emotional one. Get the details right and the savings over five years can run into the hundreds of thousands of shekels.