Israel unveils planned 0% tax rate for 2026 immigrants for their first 2 years

New immigrants and returning residents will be offered a zero-percent income tax rate for their first two years if they move to Israel in 2026, under a dramatic new tax reform unveiled today.

The reform, introduced as part of the 2026 state budget, is designed to attract skilled professionals, entrepreneurs and investors at a time of rising antisemitism abroad and shifting tax policies in Western countries such as Britain, the plan’s architects say.

“This is a Zionist and economic revolution,” Finance Minister Bezalel Smotrich says at a ceremony at the offices of Nefesh B’Nefesh, an organization that supports immigration to Israel. “It’s worth being a new immigrant.”

Under the plan, immigrants and returning residents who move to Israel in 2026 will pay no income tax in 2026 and 2027. Their tax rates will gradually increase to up to 10% in 2028, up to 20% in 2029 and up to 30% in 2030.

These rates will apply up to an annual income cap of NIS 1 million (about $305,000).

Returning residents will need to have been abroad for at least ten consecutive years, meaning that Israelis who left the country over the past few years, during the planned judicial overhaul and the war with Hamas, will not be eligible.

The new benefits will be added to existing incentives for immigrants, including a 10-year exemption on taxes from foreign income and various tax credits, the Finance Ministry says.