Last Updated 6 months ago

Recently, Finance Minister Bezalel Smotrich announced a potential new tax reform for new olim, effective starting in 2026. The announcement was made in partnership with Nefesh B’Nefesh and the Tax Authority. 

For the past year, based on the old rules, we have been advised to make Aliyah before the end of 2025. This new proposed legislation could flip all of that on its head and push people to wait a couple of months before coming. But even if you already made Aliyah recently, there may be a way to benefit from the new rules.

If New Yorkers didn’t already have enough reason to make Aliyah after the recent elections, Israel has just announced a game-changing new tax reform for immigrants. 

The proposal includes massive benefits of up to 0% tax for 2026 and 2027 on income up to 1,000,000 NIS. Then, a gradual increase to 10% in 2028, 20% in 2029, and 30% in 2030. This proposal is in addition to the traditional 10-year Aliyah benefit. The goal is to make Aliyah more financially attractive, encourage skilled professionals to relocate, and strengthen Israel’s economy. 

Key Points

• New immigrants arriving in 2026 may qualify for a 0% Israeli tax on up to 1 million NIS of income.
• Gradual tax increases are projected to reach 30% by 2030.
• Reform appears to apply only to those arriving in 2026 or later.
• U.S. citizens can potentially combine this with the Foreign Earned Income Exclusion.
• Timing your move may now be one of the most important financial decisions you make.

Understanding the New Aliyah Tax Reform

At first glance, this reform seems almost too good to be true. Yet, there’s a big catch. The actual text of the law has not been published. This is a set of proposed rules, with nothing in actual print form yet. 

According to the released details, it appears that the reform will only apply to new immigrants arriving in 2026 or later. If that’s the case, the timing of the big move could have a massive financial impact.

Previously, there was a strong incentive to make Aliyah before December 31, 2025. Beginning in 2026, new immigrants are required to report their worldwide income from the very first year, even if that income remains exempt for the 10-year period. 

That change meant more reporting and less privacy for new olim. Now, with this new reform on the horizon, the calculus might flip. It could actually be more beneficial to wait until 2026 to make Aliyah and take advantage of the new reduced tax rates.

How the 2026 Aliyah Tax Reform Affects U.S. Citizens

Many people are asking how the new Israeli tax reform affects U.S. citizens. Under Israel’s long-standing 10-year tax exemption, they won’t pay Israeli tax on income earned outside of Israel. That includes their U.S. brokerage account, rental property, and pension accounts. 

With the proposed reform, there is also the potential for a 0% tax on up to 1 million NIS of Israeli income in 2026–2027. This could be from an Israeli salary or even remote work for U.S. employers. Again, though, details will be essential and have yet to be revealed.

Sounds great for Israeli taxes, but as always, there’s a catch. The IRS taxes U.S. citizens on their worldwide income. So while Israel may exempt their salary, the U.S. will still want its share.

 However, the Foreign Earned Income Exclusion (FEIE) can change the picture. The FEIE allows qualifying taxpayers to exclude up to $132,000 (indexed annually for 2026) of earned income each year. Combining this with Israel’s exemptions could mean they owe little or nothing to either country.

For others in similar situations, careful planning remains essential. Using the FEIE properly may require extensions and precise coordination between your U.S. and Israeli filings. With the proper guidance, however, this combination could make more than a few Miami retirees start wondering if Netanya might actually be the smarter move.

Could This Be a Trap?

Here’s where excitement turns into caution. Until recently, anyone making Aliyah before December 31, 2025, had a clear advantage, as starting in 2026, new immigrants must report worldwide income from the start, even if they are still exempt. 

That rule is actually written down as law already. That meant more paperwork and less privacy, so many rushed to make Aliyah before the end of 2025. Now, this new reform tempts people to wait until 2026, creating a confusing overlap of incentives. 

The trap is that the official law text hasn’t been published, and no one knows exactly how these rules will interact. It’s also uncertain whether final regulations will even be ready when 2026 begins.

That leaves one big question: should you make Aliyah before January 1, 2026, to avoid reporting your worldwide income, or after to qualify for the 0% exemption? It’s not a simple choice.

If you made Aliyah in the past 90 days, you might consider filing Shnat Histaglut (the acclimation year) to delay your official Aliyah date just enough to count as a 2026 arrival. But this move carries risks. Without clear guidance from the Tax Authority, it could backfire and leave you with new filing requirements and no added benefits.

Until more details are published, this reform might be a trap disguised as an opportunity. The safest move for now is to get in touch, and we can help you weigh the pros and cons of when to make Aliyah and whether or not to make the Shnat Histaglut election.