New immigrants and qualifying returning residents receive a defined period during which foreign-sourced income is exempt from Israeli tax; those who became residents from 1 January 2026 must still report it. The exemption covers income arising abroad — not income generated by work performed in Israel, which is Israeli-sourced regardless of who pays it or where.
It applies to income whose source is outside Israel: foreign investments, foreign rental income, foreign pensions, and business activity genuinely conducted abroad. The intent is to avoid penalising people for assets accumulated before arriving.
Work physically performed in Israel is Israeli-sourced income, even if the client is foreign, the contract is foreign and payment lands in a foreign account. Someone who moves to Israel and continues working remotely for an overseas employer is generally generating Israeli-sourced income from day one. This is the single most common misunderstanding in this area, and it is expensive to discover late.
A temporary provision enacted in 2026 softens this for some arrivals: new immigrants and veteran returning residents who became residents between 5 November 2025 and 31 December 2026 may qualify for a capped exemption on income from work in Israel (up to NIS 600,000 in 2026, pro-rated, and up to NIS 1 million in each of 2027 and 2028, with lower caps after that). The conditions are specific and should be checked before relying on it.
The clock runs from the date residency begins, not from the date of arrival, and not from when someone decides to start counting. Establishing that date correctly, with evidence, matters — both for the exemption itself and for what happens when it ends.
The exemption is finite. Structures that made sense during the period may need revisiting before it expires, and that is far easier to do in advance than afterwards.
Generally not, if the work is performed in Israel. The source follows where the work is done, not where the employer or the payment sits.
The categories differ, and so do the conditions. Which one applies depends on how long you were previously non-resident.
For those who became residents before 2026 it generally did. Amendment 272 cancels the reporting exemption for anyone who becomes a resident from 1 January 2026, so the income stays exempt but must be reported.