Olim Tools / Zero tax for new olim
Zero income tax for new olim
If you moved to Israel from 5 November 2025, your Israeli salary can be free of income tax for five years, up to a cap each year. Here's what you could save, what's confirmed, and how to claim it. הוראת שעה לעידוד עלייה
compared with the normal 2026 brackets and your credit points
| Tax year | Salary | Tax-free up to | Normal tax | With exemption | Saved |
|---|---|---|---|---|---|
| 2026 | ₪240,000 | ₪600,000 | ₪26,481 | ₪0 | ₪26,481 |
| 2027 | ₪240,000 | ₪1,000,000 | ₪20,673 | ₪0 | ₪20,673 |
| 2028 | ₪240,000 | ₪1,000,000 | ₪22,125 | ₪0 | ₪22,125 |
| 2029 | ₪240,000 | ₪350,000 | ₪25,029 | ₪0 | ₪25,029 |
| 2030 | ₪240,000 | ₪150,000 | ₪27,933 | ₪0 | ₪27,933 |
Estimate, not tax advice. Salary only, spread evenly over the months you're here, taxed with the site's 2026 brackets and credit points for every year (later years' brackets aren't published yet). Assumes a 6% pension, no children and no other income. Includes your oleh credit points. Bituach Leumi and health tax are not part of this exemption as far as the circular says. See your monthly take-home.
Israel Tax Authority: Income Tax Circular 07/2026 (Hebrew PDF, dated 5 July 2026) (opens in a new tab) · checked 2026-10-16
The caps, year by year
The exemption covers your taxable income from work in Israel up to these amounts. Anything above the cap is taxed as usual, starting from the lowest bracket, with your normal credit points.
Confirmed in the circular
Israel Tax Authority: Income Tax Circular 07/2026 (Hebrew PDF, dated 5 July 2026) (opens in a new tab) · checked 2026-10-16
If you became resident during 2026, the 2026 cap is cut in proportion to the days left in the year. The circular's own example: arriving on 1 July 2026 gives 183/365 of the cap.
Israel Tax Authority: Income Tax Circular 07/2026 (Hebrew PDF, dated 5 July 2026) (opens in a new tab) · checked 2026-10-16
Who qualifies
- New olim with an oleh visa or teudat oleh (or who are entitled to the absorption basket), who first became Israeli residents in the window.
- Returning residents who lived abroad for at least 10 years in a row, hold a returning-resident certificate from the Aliyah and Integration Ministry, and moved back in the window.
- The window opens on 5 November 2025. Confirmed in the circular
- It closes on 31 December 2026 according to the circular, but the Tax Authority's service page (last updated 12 October 2026) says arrivals up to 10 February 2027. Awaiting accountant confirmation
- What counts is when you really moved your life here, not the date on your certificate.
Israel Tax Authority: Income Tax Circular 07/2026 (Hebrew PDF, dated 5 July 2026) (opens in a new tab) · checked 2026-10-16
Israel Tax Authority: applying for the olim and returning residents tax relief, 2026-2030 (gov.il service page) (opens in a new tab) · checked 2026-10-16
What income counts
Only income from your own work in Israel: a salary, or income from your business or profession. Interest, dividends, rent and profits from selling property or shares are taxed as usual. Pay from a relative, or from a company a relative controls, is tax-free only up to ₪140,000 a year (₪150,000 in 2030), and only through the annual return. A company you own 100% doesn't count as a relative.
Israel Tax Authority: Income Tax Circular 07/2026 (Hebrew PDF, dated 5 July 2026) (opens in a new tab) · checked 2026-10-16
How to claim it
- Through your employer, during the year. File form 116ע with the Tax Authority (instead of the usual form 116). Attach your teudat oleh or returning-resident certificate, the Population Authority's record of your entries and exits for 2016 to 2025 (for you and your spouse), your payslips, and a printout of the Tax Authority's days-in-Israel simulator.
- The limit through your employer is ₪300,000 a year, or ₪500,000 if you're registered to file an annual return (pro-rated in 2026). You also need to pass a days test: generally no more than 90 days a year in Israel in 2016 to 2025, for you and your spouse, with limited exceptions.
- Everything else (above those limits, pay from a relative, or if you fail the days test but still qualify) you claim in your annual return, form 1301.
Form 116ע: request for the exemption through your employer (Hebrew PDF) (opens in a new tab) · checked 2026-10-16
Tax Authority days-in-Israel eligibility simulator (Excel) (opens in a new tab) · checked 2026-10-16
Israel Tax Authority: applying for the olim and returning residents tax relief, 2026-2030 (gov.il service page) (opens in a new tab) · checked 2026-10-16
What can cancel it
If you stop being an Israeli resident in 2028 or 2029 and spend fewer than 75 days in Israel that year, the exemption is cancelled back to the start, and tax for every year you used it is worked out again. A trip abroad on its own doesn't do this if Israel is still your home.
Israel Tax Authority: Income Tax Circular 07/2026 (Hebrew PDF, dated 5 July 2026) (opens in a new tab) · checked 2026-10-16
What we checked, and what's still open
- Window opens 5 November 2025Confirmed in the circularCircular 07/2026, sections 2 and 4(a)
- Window closes 31 December 2026Awaiting accountant confirmationCircular 07/2026, sections 2 and 4(a) say 31/12/2026. The gov.il service page (updated 12 Oct 2026) says arrivals up to 10 February 2027.
- Yearly exemption caps: 2026 ₪600,000, 2027 ₪1,000,000, 2028 ₪1,000,000, 2029 ₪350,000, 2030 ₪150,000Confirmed in the circularCircular 07/2026, section 2 table
- For residents who arrived during 2026, the 2026 cap is cut in proportion to the days left in the year (days from arrival to 31 December, divided by 365)Confirmed in the circularCircular 07/2026, section 11 (example: arrival 1 July 2026 = 183/365)
- Only income from your own work in Israel (salary, business or profession) is exempt. Interest, dividends, rent and asset sales are taxed as usual.Confirmed in the circularCircular 07/2026, sections 3 and 5
- Income above the cap is taxed from the lowest bracket up, with your usual credit pointsConfirmed in the circularCircular 07/2026, section 11 and example 1
- Through your employer during the year (tax coordination with form 116ע) the limit is ₪300,000 a year, or ₪500,000 if you're registered to file an annual return. Anything above that is claimed in the annual return.Confirmed in the circularCircular 07/2026, sections 8, 10 and 11; gov.il service page
- To get it through your employer, you (and your spouse) must pass a days-in-Israel test for 2016-2025: generally no more than 90 days a year, with limited exceptions. Otherwise you claim it in the annual return.Confirmed in the circularCircular 07/2026, section 9
- Pay from a relative or a company a relative controls is exempt only up to ₪140,000 a year (₪150,000 in 2030), and only through the annual returnConfirmed in the circularCircular 07/2026, section 6
- A returning resident qualifies only after at least 10 years in a row living abroad, and must hold a returning-resident certificateConfirmed in the circularCircular 07/2026, section 4
- If you stop being an Israeli resident in 2028 or 2029 and spent fewer than 75 days in Israel that year, the exemption is cancelled back to the startConfirmed in the circularCircular 07/2026, section 14
- The temporary provision took effect on 31 March 2026, as sections 8 and 9 of the Economic Efficiency Law for the 2026 budgetConfirmed in the circularCircular 07/2026, section 1 and footnote 1
- Passed by the Knesset at the end of March 2026 (reported as 30-31 March)Awaiting accountant confirmationReported by news and law-firm sites; not checked at a Knesset page
- Bituach Leumi and health taxAwaiting accountant confirmationThe circular is about income tax only and says nothing about Bituach Leumi or health tax. This tool assumes they are still due.
Checked 2026-10-16 against the Tax Authority's circular PDF and service page. The law's full name: חוק עידוד עלייה לישראל וחזרה אליה (הוראת שעה), התשפ"ו–2026.
Questions
Do I have to do anything to get it?
Yes. Your employer won't apply it on its own. You either ask the Tax Authority for a tax coordination (form 116ע) so your employer stops taking income tax, or you claim it back in an annual return after the year ends.
Does it cover my US or other foreign income?
This exemption is for income from work you do in Israel. Foreign income has its own, older exemptions for olim (sections 14 and 97 of the Income Tax Ordinance), and the circular says this one is added on top of those, not instead of them.
What if I leave Israel?
If you stop being an Israeli resident in 2028 or 2029 and spend fewer than 75 days in Israel that year, the whole exemption is cancelled back to 2026 and the tax is worked out again without it.
I made aliyah in 2025 before November. Do I get it?
No. The window opens on 5 November 2025. Moving earlier, even with an 'adjustment year' (shnat histaglut), doesn't count. The test is when you really moved your life here, not the date on your teudat oleh.
Does it change my Bituach Leumi or health tax?
The circular is about income tax only and doesn't mention Bituach Leumi or health tax, so this site assumes they're still due. Awaiting accountant confirmation.
Estimates, not tax advice. This is a new law, and the circular, the service page and payroll practice are still settling. Confirm your own case with an accountant before you rely on it, and before you change a job offer or a moving date because of it.
