Knesset Finance Committee advances tax credit bill for IDF reservists

The Knesset Finance Committee advances revised legislation to expand financial benefits for IDF reservists, after the bill had stalled in the committee for several weeks due to disagreements over who would actually benefit from the tax credit.

Critics argued that under the original bill, reservists who earn less than the tax threshold would see little to no financial gain, while higher-income reservists would receive the full benefit.

The delay prompted Finance Minister Bezalel Smotrich, who heads the far-right Religious Zionism party, to announce that his faction would refuse to vote with the coalition until the bill was brought for approval.

Under the revised bill, reservists who earn below the income-tax threshold will receive a monthly supplement averaging NIS 3,000 ($925) for each month of reserve duty, topping up their monthly incomes up to NIS 9,800 ($3,000). The benefit, which currently exists as a temporary measure set to expire in December 2025, would become permanent under the new law, according to a statement from the committee, should it pass in the Knesset.

Likud MK Hanoch Milwidsky, who chairs the committee, says the new bill is built on “two pillars”: first, ensuring that lower-income reservists who do not reach the tax-payment threshold receive meaningful support, and second, updating the law in future years to reflect changing reserve-duty demands.

Under the terms of the bill, those who serve at least 110 days of reserve duty per year will receive the largest tax credit. But the legislation also says that in 2028, when reserve-duty requirements are expected to shrink, the threshold for receiving the highest tier of tax credit would fall proportionally so that the benefit applies to “most reservists in practice, not only a select few,” Milwidsky says.

With committee approval secured, the bill will now advance to the Knesset for its second and third readings.