Finance Minister Bezalel Smotrich revealed at the Association of Tax Consultants conference last night that he intends to encourage immigration to Israel through a tax exemption for new immigrants on income generated in Israel. At present, there is a ten-year exemption for new immigrants for income generated outside Israel, but not for income generated in Israel.
“We have to encourage Aaliyah (Jewish immigration) through massive tax advantages. This will bring in a great deal of human capital and financial capital. “Nowadays, a new immigrant gets a ten-year exemption from income generated abroad, so he leaves money abroad,” Smotrich said. “The goal is that it should bring money here, so the economy will benefit. There is no cost to us, because the money is not here.”
On January 1, 2026, the ten-year exemption for new immigrants and returning residents from reporting income abroad will be eliminated, although the exemption from taxes on income abroad will remain.
Smotrich’s announcement of a plan to give new immigrants a tax exemption on income in Israel also contradicts the position expressed by the heads of the Israel Tax Authority in recent years, who are calling for the exemption for new immigrants to be abolished altogether.
But sources in the Tax Authority told Globes that if the minister takes the initiative to take a dedicated measure granting a temporary tax exemption to anyone who immigrates to Israel until the end of 2026, the authority will support this step, because at stake is the opportunity to bring Jews from Western countries who suffer from anti-Semitism to Israel, and bring capital to the country.
Smotrich also announced that he intends to cut taxes, but did not provide details. The assessment in the Ministry of Finance is that the main step on the agenda is to unfreeze income tax brackets. As part of the austerity measures implemented to finance the war, the Ministry of Finance froze the annual review of income tax brackets until 2027 (inclusive). If the freeze is lifted in 2026, some workers will drop into a lower tax bracket and pay a lower income tax rate.
Smotrich also commented on the housing plan approved by the government yesterday. He added, “The plan will mainly begin next year, and will support the expansion of housing supply by tens of thousands of units.”
Smotrich added advice for homebuyers: “Don’t be stupid.” “Negotiate with contractors. Lower prices. They have plenty 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 contractors to continue raising prices more and more. No one should think that after the war the national mood will improve, interest rates will fall, and there will be a housing rush that will enable contractors to raise prices again.”
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Smotrich also spoke about the defense budget, saying: “The defense establishment must become more efficient and within a reasonable budget. It will still be higher than it was before the war, and will probably remain so in the coming years, but things cannot continue as they have been for the past two years, where the defense establishment has received a blank check with almost no strings attached. It will have to return to normal numbers.”
Published by Globes, Israel Business News – en.globes.co.il – on October 27, 2025.
© Copyright Globes Publisher Itonut (1983) Ltd., 2025.
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