{"id":230678,"date":"2026-07-31T15:33:09","date_gmt":"2026-07-31T15:33:09","guid":{"rendered":"https:\/\/www.europesays.com\/iran\/230678\/"},"modified":"2026-07-31T15:33:09","modified_gmt":"2026-07-31T15:33:09","slug":"what-new-immigrants-need-to-know-about-israels-tax-exemption","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/iran\/230678\/","title":{"rendered":"What new immigrants need to know about Israel’s tax exemption"},"content":{"rendered":"

The Israeli Tax Authority (ITA) has issued an implementation circular which effectively shrinks the new exemption for olim<\/a> (new immigrants) and returnees, regarding Israeli earned income (Circular 07\/2026).<\/p>\n

This article discusses what the Knesset<\/a> enacted, what the Israeli Tax Authority is now saying, and what you can do about it.<\/p>\n

Legislated olim tax benefits<\/p>\n

Starting in 2026, olim may be exempt from Israeli tax<\/a> on Israeli source income if they acquired Israeli resident status in the period after November 5, 2025 and until December 31, 2026. This applies to first-time residents or those returning from abroad after a minimum of 10 years, according to the Law for Encouraging Aliyah<\/a> to Israel and Returning to It\u201d (Temporary Order), 2026.<\/p>\n

Such individuals will continue to enjoy the existing, separate 10-year Israeli tax holiday for foreign source income and capital gains.<\/p>\n

The new exemption applies to active Israeli source income from a business or employment. There is no exemption for passive Israeli income namely interest, dividends, rental income, or capital gains.<\/p>\n

\"TheThe Knesset building, Jerusalem, Israel, on Independence Day. Taken from the south, from The Israel Museum. (credit: Beny Shlevich \/ GNU Free License)<\/p>\n

The exemption is only available in the following years up to the following amounts:<\/p>\n

In 2026, NIS 600,000 reduced pro rata to the time in 2026 before the individual became resident in Israel; 2027, NIS 1 million; 2028, NIS 1m.; 2029, NIS 350,000; and 2030, NIS 150,000.<\/p>\n

However, the annual limit for amounts received from a related party as defined in detail (other than a wholly owned company) is only NIS 140,000.<\/p>\n

The one-year \u201csettling in\u201d election (to remain a foreign resident) is ignored, meaning that the exemption may still be available.<\/p>\n

If the individual stops being an Israeli resident in 2028 or 2029 and spends under 75 days in Israel in one of those years, the above exemption is forfeited.<\/p>\n

Tax circular implementation comments<\/p>\n

Olim and returnees must clear a number of hurdles to enjoy the new exemption. One possibility is to wait until after the year\u2019s end and file a tax return requesting a tax refund.<\/p>\n

However, in order to enjoy a mid-year exemption during the year concerned, the circular lays down many rules not in the law itself, as summarized below.<\/p>\n

The above exempt income limits (up to NIS 1m. per year) are reduced to NIS 300,000 if the individual isn\u2019t required to file an annual tax return and NIS 500,000 if he or she is required to file.The individual must obtain a printout from the Interior Ministry detailing days spent in Israel spanning 2016-2025.The number of days in Israel should not exceed 90 per year in more than three years. In two of those years, up to 182 days in Israel is acceptable. In the third year, it goes down to 150 days.The number of days in every three-year period ending in the years 2018-2025 must not exceed 425 days.The individual\u2019s spouse must fall within the same limits from the year they married or began living together.Payments by related parties remain restricted to NIS 140,000 per year.The individual must fill in Israeli Tax Form 116 \u201cAyin [for olim],\u201d \u201cApplication For Relief And Coordination In The Tax Calculation.\u201d Note that this contains three pages of Hebrew questions plus 14 footnotes plus an asterisk saying you cannot be represented by an accountant or other representative.Applicants must download and fill in a Hebrew \u201csimulator\u201d spreadsheet which checks their days spent in Israel.An employee must file an online request for \u201ctax coordination,\u201d and freelancers must request a reduction in tax instalments.Applicants must attach their Immigrant Certificate (Teudat Oleh) or Returning Resident Certificate (Teudat Toshav Chozer), the Interior Ministry days printout, paychecks, and other income paperwork, and the completed \u201csimulator\u201d to their request.Additional tax circular remarks<\/p>\n

The circular says that the exemption is not available for income allocated to a taxpayer by a company which is fiscally transparent in Israel or abroad (Para.13.6).<\/p>\n

This is not ideal for olim with a 10% or higher interest in a partnership, Israeli family company, or a US LLC or S-Corporation. But the exemption should be available for salary or management fees paid (not allocated) to the oleh and to profit allocations to 100% shareholders.<\/p>\n

There is no rule for profit allocations by \u201cwallet companies\u201d: ITO Sec 62A, Para.5 (c).<\/p>\n

It is unlikely that many people will request the new exemption mid-year. Filing tax returns after the year-end alone or using an accountant may yield a better exemption more easily.<\/p>\n

As always, consult experienced professional advisors in each country concerned at an early stage in specific cases.<\/p>\n

The writer is a certified public accountant and tax specialist at Harris Consulting & Tax Ltd. <\/p>\n

leon@hcat.co
<\/p>\n

www.gov.il\/en\/service\/tax-relief-new-immigrants.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"The Israeli Tax Authority (ITA) has issued an implementation circular which effectively shrinks the new exemption for olim…\n","protected":false},"author":2,"featured_media":230679,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[33],"tags":[5859,37,22951,39853,4028,37763,5155,26590,4298,14458],"class_list":["post-230678","post","type-post","status-publish","format-standard","has-post-thumbnail","category-israel","tag-aliyah","tag-israel","tag-israel-tax-authority","tag-israeli-taxes","tag-knesset","tag-law-of-return-israel","tag-money","tag-olim","tag-tax","tag-taxes"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@iran\/117015321455221914","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/230678","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/comments?post=230678"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/230678\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media\/230679"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media?parent=230678"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/categories?post=230678"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/tags?post=230678"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}