Israel's Big Income Tax Incentive for new Olim and Returning Residents

Israel has just handed new olim and returning residents a significant income tax incentive — the window to benefit is open until 31 December 2026.

Israel's 2026 Budget, passed in the early hours of 30 March, granted a temporary, but large, exemption from Israeli income tax on Israeli-source earned income for new olim and returning residents who become Israeli tax residents between 5 November 2025 and 31 December 2026.

This is a meaningful addition to the existing aliya package, which already exempts foreign-source passive income and capital gains for 10 years. The new exemption covers income you actively earn — as an employee, consultant, professional, or business owner — up to NIS 1 million (approximately R5.36 million) per year in 2027 and 2028.

Crucially, Israeli tax law sources income based on where the work is performed, not where the employer sits. A South African who makes aliya but continues working remotely for a South African employer is likely earning Israeli-source income — and may qualify for the exemption with proper structuring.

I've written about the detail, including the anti-avoidance rules and what this means for South Africans considering aliya, in an op-ed published in the SA Jewish Report this week.

Read the full article here.