Israelis face a new tax blow: what they will have to pay for

Israeli authorities are seeking additional sources of revenue to cover military expenses, compensation, and national debt. Changes are being considered to VAT, income tax, a tax on vacant land, as well as new levies on electric vehicles, sugary drinks, and plastic. Some measures are already in effect, while others remain at the level of IMF recommendations.

Israeli authorities are seeking additional sources of revenue to cover defense spending, compensation for war victims, and servicing the national debt. According to the publication, by the end of 2025 direct military expenses reached 231 billion shekels. The government is considering several avenues: an increase in VAT (already raised from 17% to 18% as of January 1, 2025), a tax on vacant land at 1.5% of its value, freezing tax brackets, raising the tax on high incomes from 3% to 5% (an IMF recommendation), increasing the tax on electric vehicles to 48% from 2026, as well as taxes on sugary drinks and single-use plastics. Arnona will continue to be indexed—the increase coefficient for 2027 is 3.05%. The author notes that the main risk for families is not a single large increase but the simultaneous rise of several payments. Some measures are already in effect, while others remain at the proposal stage, not yet legislatively approved.