Tax Benefits for New Immigrants to Israel

Key Exemptions and Reliefs to Know

New immigrants may be entitled to significant tax benefits under the Income Tax Ordinance [New Version], including tax exemptions on income from outside Israel, reliefs relating to capital gains, reporting obligations, credit points, and additional benefits, subject to the conditions set out by law.

Please note that new immigrants in 2026 may, in certain cases, also be entitled to benefits relating to income produced or accrued in Israel.

Tax benefits for new immigrants may apply to different types of income, assets, and rights outside Israel. However, the scope of these benefits depends, among other things, on the classification of the income, where it was actually produced, and the date on which the individual is considered an Israeli resident for tax purposes. It is therefore important to examine, at an early stage, which benefits may apply and what conditions and limitations are relevant.

Who Is Considered a New Immigrant Under the Income Tax Ordinance?

Under the Income Tax Ordinance, a new immigrant is an individual who became an Israeli resident for the first time. However, determining when a person is considered an Israeli resident for tax purposes is not always straightforward. In some cases, a substantive review of the person’s overall life circumstances is required, rather than relying only on the formal date or the number of days spent in Israel. For example, questions may arise in cases of gradual relocation to Israel, or where a person arrives in Israel, explores the possibility of settling there, leaves after a period of time, and later returns.

The question of tax residency has significant practical importance because it determines when the benefits period begins and when it ends. Therefore, anyone whose life circumstances remain connected both to Israel and abroad should carefully examine the start date of Israeli tax residency.

Tax Exemption for New Immigrants Under the Income Tax Ordinance

Section 14(a) of the Income Tax Ordinance generally provides a tax exemption for new immigrants and veteran returning residents for a period of ten years from the date on which they became Israeli residents, with respect to income produced or accrued outside Israel, or income originating from assets outside Israel. Subject to the conditions set out by law, the exemption applies to all types of income sourced outside Israel, including passive income from rent, interest, dividends, royalties, and pensions originating abroad, as well as business income, professional income, and employment income, provided that the work is not performed in Israel.

With respect to capital gains, Section 97(b)(1) of the Ordinance also provides an exemption from tax on capital gains from the sale of an asset outside Israel, if the sale is made within the ten-year benefits period and subject to the conditions set out by law. If the asset is sold after the end of the ten-year period, an exemption may apply to the proportionate part of the gain that accrued up to the end of the benefits period. In that case, Israeli tax liability would apply only to the gain that accrued thereafter, all subject to the provisions of the law and the circumstances of the case.

In this context, it is important to remember that the exemption is not necessarily limited only to assets or income that existed before immigration to Israel. In appropriate cases, income or rights created after immigration may also fall within the scope of the benefits, including assets acquired after the immigration date and sold during the exemption period, as well as assets inherited by a new immigrant, all subject to the conditions set out by law and the circumstances of the case.

The purpose of the benefit is to prevent a situation in which the mere move to Israel creates a tax liability on income and assets outside Israel that were not previously subject to Israeli tax. Therefore, anyone holding assets, investments, shares, a foreign company, or sources of income outside Israel should examine how each item of income is classified and whether it falls within the scope of the exemption.

In addition, in certain cases, reliefs may also apply to income from abroad of a company owned by a new immigrant. However, it is important to distinguish between ownership of a foreign company and its actual management. Where control, management, or work performed for the activity is carried out from Israel, Israeli tax implications may arise. The structure of the activity and the way it is conducted after immigration should therefore be reviewed carefully.

Reporting Obligations for New Immigrants from 2026

Until 2026, new immigrants enjoyed, alongside the tax exemption, an exemption from reporting obligations with respect to income, assets, and liabilities outside Israel for a period of ten years. Following Amendment 272 to the Income Tax Ordinance, as of January 1, 2026, this reporting exemption was abolished for individuals who became Israeli residents from that date onward. Therefore, individuals who become Israeli residents on or after January 1, 2026, are no longer entitled to an exemption from filing an annual tax return and a declaration of capital with respect to income, assets, and liabilities outside Israel.

Even where the substantive tax exemption continues to apply, the reporting obligation may still remain in effect. Therefore, anyone holding accounts, investments, companies, or assets outside Israel should also prepare in advance for the reporting aspects.

Tax Exemption on Israeli Income for New Immigrants in 2026

As of January 1, 2026, a temporary provision entered into force that, for a limited period, expands the benefits to certain income produced or accrued in Israel, subject to the conditions, limitations, and caps set by law.

The temporary provision applies to a new immigrant who became an Israeli resident for the first time, as well as to a veteran returning resident, if they became an Israeli resident during the period from November 5, 2025, through the end of the 2026 tax year. With respect to a new immigrant, the exemption may apply to income from employment or business generated in Israel. However, this is a limited arrangement that must be examined according to its specific conditions.

For further reading, see also the article “New Tax Exemption On Israeli-Source Income”

Acclimatization Year, Credit Points, and Additional Benefits for New Immigrants

• Acclimatization year for new immigrants – In addition to the regular tax benefits, the law also includes an acclimatization year mechanism. This option is intended for individuals who arrive in Israel and wish to examine whether they will in fact settle there, without the move being treated immediately and irrevocably as a move for tax purposes.

Under this mechanism, and subject to the conditions set out by law and to timely election, the new immigrant or veteran returning resident, as applicable, will be treated as a foreign resident for all purposes during the acclimatization year. However, if at the end of that period the individual decides to continue living in Israel, the acclimatization year will be counted for purposes of the exemption periods described above. The request for an acclimatization year must be filed within 90 days from the date of arrival or return to Israel, using Form 1130 – Notice of Election of an Acclimatization Year.

• Credit points for new immigrants – In addition to the tax exemption on certain types of income, new immigrants may also be entitled to tax credit points for a defined period from the date of immigration. This is a separate benefit that may affect the actual amount of tax imposed on taxable income in Israel.

Anyone who begins working in Israel after immigration, or produces taxable income in Israel, should also examine this benefit as part of the overall review of tax rights. In particular, it is important to examine the date of immigration, the way in which the credit points are spread over the different periods, and the effect of military service or post-secondary studies on the count of benefit months.

Individuals who immigrated to Israel before 2022 are generally entitled to credit points for the first 42 months from the date of immigration, with the number of credit points varying between sub-periods during the benefits period.

Individuals who immigrated to Israel in 2022 or thereafter are generally entitled to credit points for the first 54 months from the date of immigration, with the number of credit points varying between sub-periods during the benefits period.

The count of months, as applicable, begins on the date of receipt of the immigrant certificate and continues consecutively, even if the immigrant had no taxable income in Israel during that period. Therefore, the benefit cannot be “saved” for later years if it was not used on time.

Alongside this, a period of regular military service in the Israel Defense Forces (IDF) or a period of studies at a post-secondary institution is not counted as part of the 42 or 54 months, as applicable. Therefore, the remaining unused benefit may be used thereafter.

• Tax exemption on interest from a foreign currency deposit – In certain cases, a new immigrant may also be entitled to a tax exemption on interest from a foreign currency deposit in an Israeli bank for a period of twenty years from the date of immigration to Israel, provided that the source of the funds deposited is money that the individual held before becoming an Israeli resident. Since additional conditions relating to the structure of the deposit and the nature of the income are also examined, it is important to review the eligibility conditions in advance.
• Relief in respect of a pension originating outside Israel due to work in a foreign country. In appropriate cases, the amount of tax in Israel on that pension will not exceed the amount of tax that would have been paid on it in the country from which the pension is paid, had the individual remained a resident of that country, all subject to the conditions set out by law.
• Real Estate Taxation Benefits for New Immigrants – The law provides, under certain conditions, a purchase tax relief when purchasing a residential apartment, a place of business, or land designated for such use in Israel, where the statutory eligibility conditions are met. As a general rule, the relief may apply to property purchased in Israel during the period beginning one year before the date of immigration and ending seven years after the date of immigration, provided that the property is used by the new immigrant. In addition, the benefit may be used only once for a residential property and only once for a business property, all subject to the conditions set out by law and to the Israel Tax Authority’s instructions, including Real Estate Taxation Implementation Instruction No. 1/2023.

Because purchase tax rates, tax brackets, and the conditions of the benefit may change from time to time, the wording of the law and the relevant updates should be reviewed in each transaction as of the purchase date. One should not rely only on historical rates published for a particular period.

• Another important issue concerns new immigrants who hold foreign companies or manage activities through them. In certain cases, the law includes specific reliefs relating to control and management rules and to the tax regimes that apply to foreign companies. However, their application depends on the structure of the activity and the circumstances of the case. Therefore, where immigration to Israel involves the continued holding or management of a foreign company, the corporate and tax aspects should also be reviewed in advance, and not only the taxation of the individual’s personal income.
• Business Assistance for New Immigrants

Business entrepreneurship encouragement program – Many people are unaware that the Ministry of Aliyah and Integration operates a program to encourage business entrepreneurship among new immigrants. The program includes loans and advisory meetings designed to help new immigrants establish businesses, engage in entrepreneurship, and develop existing businesses. Assistance is provided through five business centers for new immigrants and returning residents. To receive advice, an online application may be submitted here.

Assistance for startups – The Ministry of Aliyah and Integration provides new immigrants with assistance in establishing startups, from the stage of mapping needs through the formulation of a business model, financing through loans on preferential terms, business guidance, and more. To submit an application for assistance in establishing a startup, click here.

Limitations and Notes

• Property received as a gift – Unlike property received by inheritance, as detailed above, income produced from property received as a gift after the date of immigration will not qualify for the tax benefits.
• Mixed activity – Where a new immigrant conducts activity both in Israel and outside Israel, it is necessary to examine where the work was actually performed, the type of income, and how it should be attributed between the Israeli part and the foreign part. For further reading, see also the article “Mixed Income For A Veteran Returning Resident Or New Immigrant”
• Additional benefits – This article focused on tax benefits for new immigrants. It is important to note that the State of Israel invests significant efforts in encouraging immigration through a range of additional benefits, including exemptions and discounts on the purchase of a vehicle and personal imports, customs exemptions on the import of goods, municipal tax discounts, financial assistance such as the absorption basket, public housing, social benefits, and more.

Summary of Exemptions for New Immigrants