Making Aliyah in 2026: Why South Africans Should Take a Close Look at Israel’s New Tax Incentive

For South Africans considering Aliyah, 2026 may be a particularly significant year from a tax perspective. Israel has introduced a temporary tax incentive for new immigrants that can substantially reduce Israeli income tax on qualifying income earned in Israel. But for a South African, the real question is not simply how much tax can be saved in Israel. It is how the move from South Africa to Israel should be structured from both a South African and Israeli tax perspective.

I recently discussed these issues in an interview on ChaiFM, focusing on why the new Israeli tax incentive makes 2026 a potentially important year for South Africans considering making Aliyah.

Listen to the full interview with Michael Kransdorff on ChaiFM: Listen to the ChaiFM interview – Michael Kransdorff on Aliyah tax concessions

Why 2026 is the year for South Africans to make Aliyah

Israel has introduced a significant temporary income tax incentive for new immigrants (olim) and certain veteran returning residents.

The measure applies to qualifying individuals who arrived in Israel between 5 November 2025 and 31 December 2026. The Israeli Tax Authority has now published the process for claiming the benefit.

The benefit is particularly significant because it goes beyond the traditional Israeli tax incentives for new immigrants.

Historically, one of the major attractions of making Aliyah has been Israel's generous treatment of foreign-source income for qualifying new immigrants. The new measure goes further by providing relief in respect of certain Israeli-source income from personal exertion, including employment and business income.

The exemption is phased over five years, with the applicable ceilings currently set at:

Tax year	Maximum qualifying income ceiling
2026	NIS 600,000
2027	NIS 1,000,000
2028	NIS 1,000,000
2029	NIS 350,000
2030	NIS 150,000

The legislation therefore creates a potentially valuable tax window for someone who is already considering making Aliyah.

The Israeli Knesset specifically described the measure as a means of encouraging Aliyah and returning to Israel, with the benefit applying to qualifying employment and business income.

But there is an important point for South Africans

For a South African considering Aliyah, looking only at the Israeli tax saving is not enough.

The move must be considered as a South African tax emigration as well as an Israeli immigration decision.

South Africa taxes its residents on their worldwide income. Consequently, the first question is whether the individual will continue to be a South African tax resident after moving to Israel.

This is often misunderstood.

Leaving South Africa physically does not, by itself, make someone a non-resident for South African tax purposes. Likewise, what is sometimes called "financial emigration" does not automatically terminate South African tax residence.

SARS confirms that determining whether an ordinarily resident individual has ceased to be a South African tax resident involves a factual enquiry, including whether South Africa remains that person's real home.

This makes the timing and manner of the move extremely important.

South African tax residence must be dealt with properly

A South African making Aliyah should therefore consider, before leaving South Africa:

• When South African tax residence will cease;

• Whether the individual has genuinely ceased to be ordinarily resident in South Africa;

• The application of the South Africa–Israel Double Tax Agreement;

• The South African capital gains tax consequences of ceasing tax residence;

• The treatment of South African investments and other assets after departure;

• South African-source income that may continue after Aliyah;

• South African retirement funds and pensions;

• Exchange control considerations; and

• The individual's continuing South African tax filing obligations.

SARS specifically notes that when an individual breaks South African tax residence, a deemed disposal for capital gains tax purposes may arise in respect of worldwide assets, subject to exclusions such as South African immovable property.

This can make the year of departure one of the most important tax years in the entire emigration process.

The South African–Israel tax treaty is also important

There is another reason why South Africans considering Aliyah should not approach the Israeli incentive in isolation.

An individual can potentially be regarded as resident under the domestic laws of both South Africa and Israel. In that situation, the South Africa–Israel Double Tax Agreement becomes particularly important.

The treaty contains specific residence tie-breaker rules for individuals who are residents of both countries. Significantly, the treaty provides a special rule for a person who is an Oleh, under which the individual's centre of vital interests is deemed to be in Israel for purposes of the treaty residence test.

This is a good example of why international tax advice needs to look at both sides of the border.

It is not enough to ask:

"How much tax will I pay in Israel?"

The better question is:

"What will my overall tax position be after I move from South Africa to Israel, and have I properly terminated my South African tax residence?"

Who could benefit most from the 2026 Israeli tax incentive?

The new incentive could be particularly attractive to South Africans who are considering Aliyah and expect to earn significant income from employment or a business in Israel.

For example, consider a South African professional earning substantial employment income who is already considering moving to Israel.

Under the new regime, qualifying income may benefit from the Israeli exemption during the relevant period, subject to the applicable conditions and ceilings.

That can materially change the economics of making Aliyah.

But the benefit becomes even more interesting when the individual's South African and Israeli tax positions are planned together.

This could include considering:

1. The date on which the individual leaves South Africa;

2. The date on which Israeli tax residence commences;

3. Whether South African tax residence has actually been terminated;

4. The interaction between South African domestic law and the treaty;

5. The timing of the deemed CGT disposal on cessation of South African residence;

6. The individual's South African investment portfolio;

7. Retirement funds and pensions;

8. Employment and business structures; and

9. How continuing South African-source income will be taxed after the move.

   
   

Don't confuse the Israeli tax incentive with a blanket "zero tax" regime for 2026

There has understandably been considerable publicity around the new incentive, with some descriptions suggesting that new olim can simply pay "zero tax" for five years.

That is an oversimplification.

The Israeli Tax Authority's implementation guidance makes clear that the relief is subject to eligibility requirements, income ceilings and procedural requirements. For example, the manner in which the benefit is claimed can depend on the taxpayer's circumstances and level of income. The Tax Authority also states that receiving the relief does not necessarily remove an individual's obligation to file an annual Israeli tax return where an independent filing obligation exists.

There are also special rules where the income is derived from a relative, with a lower annual ceiling.

In other words, the headline is attractive, but the detail matters.

The real opportunity for South Africans

For someone who has already been considering Aliyah, the new incentive potentially changes the calculation.

A move that was previously financially marginal may now become considerably more attractive.

But the tax saving should not be viewed as an isolated Israeli benefit.

The real opportunity lies in coordinating the South African tax exit with the Israeli tax entry.

That is particularly important for South Africans with:

• Significant investment portfolios;

• Businesses or professional practices;

• South African retirement funds;

• Shares in private companies;

• Trust interests;

• South African rental properties;

• Offshore investments;

• Substantial employment income; or

• Continuing economic interests in South Africa.

Each of these can have different consequences once South African tax residence ends.

Is 2026 the year to make Aliyah?

For someone who is already contemplating Aliyah, the answer may be yes — but the decision should be made with the tax consequences fully understood before the move takes place.

The qualifying window currently runs until 31 December 2026.

That makes timing particularly important.

A person should not make Aliyah solely because of a tax incentive. But if Aliyah is already being considered for family, religious, lifestyle, professional or personal reasons, the new Israeli tax regime means that 2026 deserves serious consideration from a tax-planning perspective.

The key is to plan the move as a single cross-border transaction rather than treating the South African and Israeli tax consequences separately.

South Africa–Israel tax advice before making Aliyah

At the Institute for International Tax & Finance, we regularly advise South Africans who are moving abroad on the South African tax and exchange control consequences of ceasing South African tax residence.

For South Africans considering Aliyah, this requires looking at both sides of the move: the Israeli tax incentives available to new olim and the South African consequences of becoming a non-resident.

The objective is not simply to obtain the lowest tax rate.

It is to ensure that the taxpayer:

leaves South Africa correctly, becomes tax resident in Israel at the appropriate time, takes full advantage of the Israeli incentives where available, and avoids unnecessary South African tax and compliance problems after the move.

If you are a South African considering making Aliyah in 2026, the time to consider the tax implications is before you leave South Africa — not after you have arrived in Israel.

Listen to the interview on why 2026 is the year for South Africans to make Aliyah

Michael Kransdorff, CEO of the Institute for International Tax & Finance, recently discussed the new Israeli tax incentive for Aliyah and what it means for South Africans on ChaiFM.

Listen to the full ChaiFM interview here