Making aliyah before Dec. 31? Read this first

If you are planning aliyah for next spring, there is a number you should look at this week. New immigrants who become Israeli residents by December 31, 2026 can earn up to ₪1 million a year in 2027 and 2028 without paying Israeli income tax on it. Arrive on January 2 instead, and that exemption is gone.

Most people I talk to have heard of the ten-year exemption on foreign income. Far fewer know about this one, and it is worth more to anyone who will actually work here.

What the temporary law gives

A temporary aliyah-encouragement law, passed at the end of March 2026, exempts from Israeli income tax the Israeli-source earned income (salary and self-employment) of new immigrants and returning residents who became residents between November 5, 2025 and December 31, 2026. Returning residents qualify after at least ten years abroad.

The exemption is capped each year:

This sits on top of the ten-year exemption on foreign income, which still applies. The new law is about the money you earn here, which the old regime always taxed.

What it is worth in practice

Take someone who arrives in December 2026 and earns ₪40,000 a month in 2027, either from an Israeli employer or as a remote worker paid through an Israeli payroll. Under the normal 2026-2027 brackets, with the basic credit points and the first-year oleh point, the income tax on that salary comes to roughly ₪9,200 a month, or about ₪110,000 for the year. Under the temporary law, it is zero. Over 2027 and 2028 together, that is more than ₪200,000 kept.

On a ₪25,000 monthly salary, the saving is still close to ₪48,000 a year. The higher you earn, the more the exemption matters, up to the ₪1 million ceiling.

What it does not cover

Three points catch people out:

• Bituach Leumi and health tax are still due. The exemption is for income tax only. On a salary, national insurance and health tax still come off every month.
• Passive Israeli income stays taxable. Interest, dividends, rent and capital gains from Israeli sources are outside the exemption.
• Some income is capped or excluded. Amounts paid by a relative are capped at ₪140,000 a year, and income that flows through a transparent entity, such as a partnership or a US LLC, is generally excluded.

The conditions that matter before December 31

Becoming a resident is not the same as landing. The Jerusalem Post’s tax column put it plainly in October: meeting the deadline requires more than filing an aliyah application. Tax residency follows your centre of life, meaning a home here, your family here, and your work and ties moving with you. A family that lands on December 28 but keeps living in New Jersey until June should not assume it qualifies.

You have to stay. The law claws the benefit back from people who leave early: the Jerusalem Post column describes a minimum of 75 days in Israel in each of 2027 and 2028.

You have to claim it. The Tax Authority’s Circular 07/2026 sets out the procedure, including a record of days spent in Israel in previous years and a dedicated request. Many people will claim it in the annual return after year-end rather than through payroll.

Americans need to run the numbers. A US citizen keeps filing in the US. An Israeli tax that is never paid cannot be used as a foreign tax credit, so for some high earners, keeping part of the Israeli tax and crediting it may work out better. The law allows the exemption to be declined in whole or in part. This is a question for a cross-border accountant, not a forum.

One more change for 2026 arrivals

Olim who became residents from January 1, 2026 also lost the old exemption from reporting foreign income and assets (Amendment 272). The foreign income is still tax-free for ten years, but it now has to be declared every year. An oleh who arrived in March 2026 files a first return in 2027, for 2026, with foreign statements attached.

The bottom line

If your aliyah date is flexible and you will earn a salary in Israel, moving your residency into 2026 can be worth six figures in shekels. But the date on your teudat oleh is not enough: the move has to be real, you have to stay, and the claim has to be made. Talk to an accountant who handles olim before you book the flight, not after.

Figures: temporary law of March 2026 and Israel Tax Authority Circular 07/2026, as reported by the Jerusalem Post (July 31 and October 9, 2026); income tax brackets and credit points for 2026, frozen through 2027. The example assumes a man arriving in December 2026 with no other credit points. The full ceilings, the Amendment 272 rules and the oleh credit point schedule are on this guide to oleh tax benefits. This is general information, not tax advice: check your own situation with a qualified accountant.