Under a new law passed by the Israeli Knesset in June 2026, residents of several communities in Judea and Samaria (the West Bank) will receive income tax concessions.
Scope and substance of the law
The new legislation covers 64 communities located in the West Bank. Under the measure, residents of those communities are entitled to an income tax concession of up to 7%, capped at 10,000 new Israeli shekels per year.
To qualify for the concessions, communities must meet a number of strict security and socioeconomic criteria. In particular, they must be situated more than 2 km from the security barrier, and armoured vehicles must be used to transport children in the area.
Retroactive application and financial details
The adopted rules apply retroactively from January 1, 2026. This means taxes already paid from the beginning of the current year through that period will be recalculated, and residents will be entitled to compensation or corresponding tax adjustments.
According to available information, the law will remain in force until December 31, 2027. The annual budgetary cost is projected at approximately 130 million shekels. The Finance Minister has the authority to extend this period with the approval of the Knesset Finance Committee.
Public and political reaction
The decision has not been received uniformly in Israeli society. The Religious Zionism party and Finance Minister Bezalel Smotrich have defended the move, describing it as "restoring the socioeconomic rights of residents living under security threats."
At the same time, significant opposition to the decision exists. Several political forces and human rights organisations, including the Association for Civil Rights in Israel, have petitioned the Supreme Court, arguing that the concessions violate the principle of equality and raise issues under international law.
The Israel Tax Authority is expected to release detailed guidance in the near future on the implementation of the decision, technical procedures, and how calculations for the prior period will be carried out.