The effects of the war linger on. Starting this year (2026) IDF reservists may receive a tax break. Also, it is proposed to revive a 1.5% wealth tax on land that was dormant since the year 2000.
IDF RESERVISTS
The Knesset passed an amendment on November 23, 2025 that increases the personal tax allowances of IDF reservists by NIS 1,452 to NIS 11,616 per year (Income Tax Amendment 283, Section 39B).
In Israel, residents receive tax “credit points” which reduce their tax bill by a fixed amount, regardless of the level of their income. This is more egalitarian than standard or itemized deductions (or personal allowances) from income.
A man generally receives 2.25 credit points. Each credit point is worth NIS 242 per month. So his Israeli tax bill goes down by NIS 544.50 per month or NIS 6,534 per year.
A woman generally receives 2.75 credit points. So her Israeli tax bill goes down by NIS 665.50 per month or NIS 7,986 per year. These are 2025 figures, which are expected to continue in 2026.
There are additional tax credits for children.
IDF Reservists tax break:
The amendment took effect from January 1, 2026, based on time served on combat duty in the IDF reserves in the preceding year.
In 2026 and 2027, a reservist receives extra credit points for reserve time served in the preceding year as follows: 0.5 credit points for 30-39 days; 0.75 credit points for 40-49 days, then a further 0.25 credit points for every extra 5 days, up to a maximum of 4 credit points 110 days or more served in the previous year.
In 2028, a reservist may receive: 0.75 credit points for 20-24 days served in the previous year, then a further 0.25 credit points for every extra 5 days, up to a maximum of 4 credit points 85 days or more served in the previous year.
Procedure:
The IDF will provide the reservist confirmation of time served. The employee then notes this in Section 16 of the annual Form 101 (employee card) which the employee hands the employer annually in January, starting January 2026. Payroll software should then be updated accordingly.
Comment:
These tax credit points are a small recompense for the contribution of IDF reservists to the war effort for lengthy periods away from home and work.
PROPERTY TAX COMEBACK
A draft Bill was published (on December 17, 2025) that proposes to reinstate an annual property tax of 1.5% on land, starting in 2026. This is really a wealth tax. The tax was reduced to 0% in the year 2000 as enforcement proved difficult (see below).
The proposed new tax would apply to a plot of land where no more than 10% is built upon. There would be an exemption for land used for agriculture unless its value exceeds NIS 100,000 per dunam (1,000 square meters). There would also be an exemption if the value is below NIS 50,000 per dunam or NIS 250,000 for all plots of land – because the aim is to tax wealth per the proposal commentary.
It appears the market value of the land would be taxed, but there would be a computerized system to determine this value. Presumably this might prevent low valuations by the taxpayer’s appraiser?
Annual online reporting of land holdings would be required by January 31. But in 2026 reporting would be required 90 days after the date the law becomes effective and the resulting property tax would be payable by the end of 2026 (after the election…).
The property tax would amount to an annual wealth tax but only on land.
Israel does not currently have any estate/inheritance tax upon death. However, capital gains tax is due when an inherited asset is subsequently sold, applying the cost of the deceased. Capital gains tax also applies to non-Israeli residents
Comment:
It remains to be seen whether and when the proposed property tax revival will be legislated by the Knesset.
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It remains to be clarified whether the currently proposed property tax would apply to: (1) land located abroad, (2) investments in real estate funds, (3) investments in private real estate holding companies, (4) investments in land-related shares traded on a stock exchange, (5) cash loans or gifts to relatives abroad who happen to invest in any of the aforementioned.
In short, will the proposed property tax crash again like last time?
As always, consult experienced tax advisors in each country at an early stage in specific cases.
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(c) Leon Harris 3.1.2026