A quiet yet significant change took place this April in the corridors of the Knesset: the Income Tax Ordinance was substantially revised, revoking the exemption from reporting that had been granted to olim and veteran returning residents on assets and income from abroad. The change takes effect only in January 2026—but those planning to make aliyah or return to Israel will need to act now if they want to benefit from the current regulations.
What exactly is changing?
Until now, the law granted olim and veteran returning residents a full exemption from both tax and reporting for ten years on overseas assets and income. The amendment eliminates the reporting exemption but preserves the tax exemption. In practice, those arriving in Israel after January 2026 will still receive tax benefits—but they’ll be required to report all their foreign holdings and earnings to the Israel Tax Authority.
A complex process that requires planning
Changing residency status is no simple matter. It involves a combination of technical criteria (number of days spent in Israel, official residence) and substantive ties (affiliation with institutions, community, and family). Anyone hoping to qualify as an oleh or returning resident by the end of 2025 needs to begin acting now: enrolling children in Israeli schools, updating their address with the National Insurance Institute, registering with a health fund—and even getting a gym membership.
For families, the decision demands not only tax planning but also emotional, logistical, and educational preparation.
And what about businesses abroad?
It’s important to note: even under the current system, the exemption isn’t automatic or all-encompassing. Olim and returning residents who continue to operate active businesses abroad may face close scrutiny by the Tax Authority—especially if any part of the business is tied to Israel. Each case must be reviewed individually, and the exemption from tax and reporting is not guaranteed.
Aliyah to Israel is on the rise
Last month, the Ministry of Aliyah and Integration published its annual immigration report—from Passover 5784 (April 2024) to Passover 5785 (April 2025). Despite the war and ongoing security challenges, the flow of aliyah has not slowed. In total, 27,281 olim arrived in Israel over the past year and chose to begin a new chapter in their lives here.
The bottom line
Olim and returning residents who want to take advantage of the current reporting exemption cannot afford to wait. The year 2025 will be the decisive one—those who arrive in 2026 will already be subject to full disclosure of their foreign assets and income.
If you’ve been waiting for the right moment—this may be it.
