Tax Authority warns higher income Israelis are leaving
A Tax Authority study shows that more Israelis emigrated in 2023-2024, with higher incomes than before. The number of leavers rose about 50% versus pre-Covid years, but income tax paid before departure jumped to about NIS 1.2 billion annually, up from NIS 500 million. The top decile accounts for 67% of income and 86% of tax paid by emigrants. Average income of leavers rose to about NIS 200,000 in 2024, a 60% real increase. High-tech and healthcare sectors saw significant increases in departures.
A new study by the Israel Tax Authority's Planning and Economics Division reveals that not only have more Israelis emigrated in recent years, but their economic profile has shifted toward higher earners. The number of Israelis leaving the country rose by about 50% compared with pre-Covid years, but the income tax they paid in the year before departure jumped sharply: from about NIS 500 million per year until 2019 to about NIS 1.2 billion in 2023 and 2024. The Tax Authority defines this as a potential tax loss of about NIS 700 million per year, though not necessarily immediate or complete, as some leavers may remain tax residents. The increase is not evenly distributed. The rate of emigration from the top decile rose from about 0.3% per year to more than 0.5% in 2024, a jump of about 80%. The top decile now accounts for about 67% of all income from emigrants and about 86% of the income tax they paid. Average income of leavers rose from about NIS 125,000 in 2015-2019 to about NIS 200,000 in 2024, a real increase of about 60%. Among those aged 40-50, the emigration rate increased from about 0.4% to about 0.7% in 2024, and their total income before departure tripled from about NIS 900 million to about NIS 2.7 billion. High-tech departures rose by about 150%, and healthcare by more than 100%. The study also notes a major rise in Israelis reporting spending more than NIS 500,000 abroad, with a fourfold jump among those who left. The authors, Dr. Ariel Greizaz and Nili Ben-Tovim, say it is difficult to determine the cause, possibly related to post-Covid job market changes or political and geopolitical developments since early 2023.