Finance Ministry proposes tax cuts for hundreds of thousands of Israelis

The Finance Ministry and Tax Authority are preparing recommendations for the next government: reduce income tax for Israelis earning between 25,000 and 53,000 shekels per month. In exchange, they propose cutting child tax credits and benefits for residents of certain localities. The recommendations are based on professional calculations and will be published before the government is formed.

The Israeli Finance Ministry and Tax Authority are preparing recommendations for the next government to reduce income tax for high earners — those with gross monthly salaries between 25,000 and 52–53,000 shekels. This affects hi-tech workers, doctors, engineers, and other professionals in the ninth and tenth income deciles (over 800,000 people). In exchange, they propose cutting child tax credit points (costing 14.5 billion shekels in 2026) and benefits for residents of certain localities (2.8 billion shekels per year). The developers cite studies by the Tax Authority (November 2025) and the Bank of Israel (June 2026) showing that the tax burden on the top decile in Israel is higher than in other countries. The specific formula for changes has not yet been determined, but attention is focused on the 31% and 35% rates. Officials acknowledge that the chances of significantly reducing benefits are slim, but they want to show the link between targeted benefits and high taxes for everyone. The recommendations are expected to be published in the coming weeks, before the government is formed.