Are you dreaming of making Aliyah? Timing is key as there’s some tax changes for Olim which you might want to know about. From January 1, 2026, new tax reporting rules will come into effect for new and returning tax residents (olim Chadashim). While these changes shouldn’t affect your tax bill, they do mean reporting obligations will apply.
What are the tax changes for new Olim after 1 January 2026.
Currently, Olim Chadashim and returning residents are exempt from both paying taxes on and also reporting their foreign income and assets. However, starting in 2026 those who become new tax residents, the reporting exemption will be removed. So, while you won’t be taxed on these incomes during your first 10-years in Israel, you will be required to report them to the Israeli Tax Authorities.
Why Make Aliyah Before 1 January 2026?
- Preserve Your Privacy: By making Aliyah before 2026, you can avoid the need to report your non-Israeli income, maintaining your financial privacy for the duration of your 10-year tax benefit period.
- Simplify Your Taxes: Reporting foreign income can be complex and time-consuming. If your only income is from non-Israeli sources you may be able to avoid reporting all together.
- Peace of Mind: Reporting can expose you to being challenged by the Tax Office. If you are using any tax planning strategies, the current reporting exemptions provide you piece of mind (at least until you finish your 10-years).
Will the new rules effect those who have already made Aliyah?
The new rules will not apply to those who have become Israeli tax residents prior to 1 January 2026. However, when there are tax changes for new Olim, indirect repercussions may be felt also by those who have already made Aliyah.
- Tax planning strategies: Be careful if using a tax planning strategy which may be illegitimate. As the new reporting requirements come into effect, the Tax Office will become more familiar with tax planning strategies. Aggressive tax avoidance will likely be challenged and new rulings produced in favour of the Tax Office.
- Sealing/closing your tax years: When you report your income on an Israeli tax return, the Tax Office have until the end of the year (that the tax return was submitted) plus another four full years to challenge you on the figures presented. If your income hasn’t been reported on a tax return at all, the Tax Office can go back up-to 10 years. This uncertainty will encourage many individuals to report their foreign income even if they are not required to do so.
- Banking headaches: Banks can be held accountable for money-laundering if untaxed funds passing through their hands. Banks can be overly precautious when accepting international payments and may request confirmation that the funds have been reported. The new tax changes for Olim may result in higher expectations from the banks.
We’re Here to Guide You
Our team of experienced tax professionals specializes in helping Olim Chadashim navigate the complexities of Israeli tax law. We can advise you on the best course of action and ensure a smooth, stress-free financial transition to your new home.
Don’t delay your Aliyah dream. Contact us today to explore your options and plan for a financially secure future in Israel.