New immigrant tax benefits in Israel in 2026: the ten-year exemption, credit points, pensions and purchase tax

Ten years of exemption: the rule

Section 14 of the Income Tax Ordinance, as amended by the 2008 reform (Amendment 168), exempts for ten years the income “produced or accrued outside Israel” of a new immigrant or a veteran returning resident. Section 97 does the same for capital gains on assets located outside Israel, whether acquired before or after aliyah. The clock starts when you become an Israeli tax resident, usually the aliyah date, and runs ten full years from there.

In practice, during that period Israel does not tax:

• rent from an apartment in New York, London or Paris;
• dividends, interest and capital gains from a foreign portfolio, a brokerage account, an ISA, a 401(k) or an IRA;
• pensions paid by a foreign scheme;
• salaries and fees for work physically performed outside Israel (business trips, days worked abroad);
• profits of a foreign company you control, subject to the controlled-foreign-company rules that are switched off during the exemption, and to the question of where the company is actually managed;
• the sale of real estate abroad, including property bought before aliyah.

Your home country keeps applying its own rules: the UK taxes rent and gains on UK property, the US taxes its citizens on everything. The Israeli exemption removes Israeli tax, not foreign tax. The guides on the US–Israel treaty and the France–Israel convention cover what stays due on the other side.

What is covered, what is not

Reporting from 2026: Amendment 272

Until 2025 an oleh enjoyed a double dispensation: no tax, and no obligation to report foreign income and assets. Under pressure from international transparency standards, Amendment 272 removed the second for people who became residents on or after 1 January 2026. They must now file every year a return listing their foreign-source income and foreign assets (accounts, securities, property, companies), while remaining exempt from tax on that income for the ten years.

In practice: an oleh who arrived in March 2026 files a first return in 2027, for 2026, with foreign statements attached. Omission is a reporting offence rather than a tax assessment, but it costs penalties and trouble later (end of the regime, asset sales, inheritance). Olim who arrived before 2026 keep the old regime until their ten years end.

The adjustment year (shnat histaglut)

An oleh or a veteran returning resident can ask, within 90 days of arrival, not to be treated as an Israeli tax resident during the first year. The point: try the move without triggering tax residency, for instance for someone keeping a business or a company abroad who is not sure of staying. If you stay, the ten-year period counts from the original arrival date, adjustment year included. If you leave, you were never an Israeli resident. The request goes to the Ministry of Aliyah and Integration on a dedicated form, and it cannot be made after 90 days.

Olim credit points

On top of the 2.25 points every resident gets (2.75 for a woman), an oleh who arrived from 1 January 2022 receives extra points over 54 months, counted from the aliyah date, set against the tax on Israeli income (salary, self-employment):

Cumulatively that is up to ₪28,000 less tax over the period, for someone earning enough to use it: points come off the tax, and tax never goes negative. The schedule is designed around a second year when you finally work full time. The clock is paused during military service, studies or a long stay abroad, on request. Olim who arrived before 2022 follow the old schedule (3 points for 18 months, then 2, then 1, over 42 months). To get them applied: fill in the oleh section of Form 101 with your employer, with the aliyah date, and check the “nekudot zikui” line on the payslip. The calculator includes these points.

Foreign pensions: exempt, then capped

For ten years a pension paid by a foreign scheme is exempt like any foreign income. Afterwards, section 9C of the Ordinance caps Israeli tax on that pension at the amount that would have been due in the country of origin had you stayed. For a US retiree this means an Israeli tax computed as the US tax on the same pension would be; an accountant produces the comparison each year. US Social Security is different: under Article 21 of the treaty it is exempt in both countries for a resident of Israel, exemption or not. UK state and occupational pensions follow the 1962 convention and its 2019 protocol, which allocate them between the countries by type of pension.

Reduced purchase tax on a home

An oleh who buys a home in Israel between one year before and seven years after aliyah can claim, once, the reduced purchase tax (mas rechisha) rate: 0.5% up to a threshold of roughly two million shekels (indexed every 16 January) and 5% above, instead of the ordinary ladder. The benefit mostly helps above the exemption threshold of the “single home” ladder, or for a buyer who already owns property abroad; below it, the ordinary ladder is sometimes better, and the choice is made case by case with the transaction lawyer. A purchase tax calculator is coming to this site; until then the Tax Authority’s official calculator does the maths.

Bituach Leumi, arnona, customs: the other benefits

• Bituach Leumi: an oleh with no income is exempt from contributions (national insurance and health) for the first 12 months, while covered by their kupat holim. From the first salary, contributions apply normally.
• Arnona (municipal tax): most municipalities give olim a discount, often up to 90% on 100 m² for 12 months, to be claimed within the first two years; conditions vary by city.
• Customs: duty-free import of personal effects, furniture and some appliances within three years of aliyah, subject to quantity limits; a customs regime, separate from income tax.
• Sal klita, ulpan, housing aid: Ministry of Aliyah benefits, not tax, paid only into an Israeli account (see the banks guide).

Returning residents: two statuses

Preparing for year eleven

In year eleven Israel taxes your worldwide income, with a credit for foreign tax. Three things to open two years before the deadline:

1. Unrealised gains. For a foreign asset held before the end of the exemption and sold after, the gain is taxed pro rata for the holding period after the exemption (linear rule). Selling or rebalancing before the deadline can erase ten years of gain.
2. Foreign rent. Choice between the regular regime (expenses deducted, credit for foreign tax) and the flat 15% with no deduction or credit; the right choice depends on the country and the yield.
3. Foreign companies and trusts. Controlled-foreign-company and trust rules wake up; a structure that was neutral for ten years can become costly.

Six common mistakes

1. Assuming remote work from Israel is exempt. It is Israeli income, taxed and contributed from day one.
2. Missing the 90-day window for the adjustment year when you are not sure of staying.
3. Not reporting foreign income when you arrived from 2026: exempt no longer means unreported.
4. Forgetting the other country. The UK keeps taxing UK property; the US taxes everything. The Israeli exemption replaces none of that.
5. Letting the olim points slip for want of filling in the Form 101 section.
6. Discovering year eleven when the assessment arrives. The moves are made before the deadline, not after.