Quick Answer: Starting January 1, 2026, new immigrants to Israel are required to report their worldwide assets and income to the Israel Tax Authority — even if no Israeli tax is owed on that foreign income. The 10-year foreign income tax exemption remains available, but the old exemption from reporting has been abolished for anyone who became an Israeli tax resident on or after that date. If you made Aliyah in 2026, you must file an Israeli tax return and declare your global financial picture from your very first year.

For decades, one of the most attractive features of making Aliyah was that new immigrants did not have to tell Israeli authorities anything about income or assets outside Israel for the first ten years of residency. You paid no Israeli tax on foreign income — and, crucially, you did not even need to report it. That era is over for anyone whose Israeli tax residency began on or after January 1, 2026.

The change, introduced through Amendment 168 to Israel's Income Tax Ordinance [New Version] 1961 (*pekudat mas hakhnasa*), was designed to bring Israel into line with international anti-money-laundering and tax-transparency standards. The tax break itself has not disappeared — new Olim arriving in 2026 and beyond can still benefit from a significant foreign-income tax exemption for up to ten years. What has changed is transparency: the Israel Tax Authority (*Reshut HaMasim*) now wants to know what you have, even when it is not taxing you on it. This guide explains what that means in practice.

1. What Changed on 1 January 2026

Before 2026, the Income Tax Ordinance granted new immigrants and returning residents a sweeping dual exemption: no Israeli tax on foreign-source income, and no obligation to report that income or the assets generating it. Both exemptions ran for ten years from the date residency was established.

Amendment 168, enacted by the Knesset and effective from the start of the 2026 tax year, split these two exemptions apart:

  • The tax exemption on foreign income survives. New Israeli tax residents who arrived on or after January 1, 2026 can still receive a 10-year exemption from paying Israeli income tax on foreign-source income (interest, dividends, rental income, capital gains, and business income generated outside Israel).
  • The reporting exemption has been abolished. Those same individuals must now file annual Israeli tax returns and disclose their worldwide assets and income, even in years when no Israeli tax is owed on the foreign amounts.
  • A new 0% tax incentive was added for 2026 arrivals. As a transitional benefit, individuals who first became Israeli tax residents during calendar year 2026 receive a 0% income tax rate on Israeli-source income in 2026 and 2027, up to an annual cap of approximately NIS 1 million. This is separate from the foreign-income exemption and applies only to income earned inside Israel.

The result is a regime that is simultaneously more generous in its tax benefits and significantly more demanding in its reporting obligations than the one it replaced.

2. Who Is Affected by the 2026 Rules

The new rules apply based on when you became an Israeli tax resident, not when you received Israeli citizenship or made formal Aliyah. The three groups to understand are:

New Olim who arrived from 1 January 2026

This group bears the full weight of the new rules. If you are recognized as an Israeli tax resident for the first time in 2026 or later, you are subject to the worldwide reporting obligation from your first Israeli tax year. You benefit from the 10-year foreign income tax exemption and, if you arrived in calendar year 2026, the 0% rate on Israeli income for two years.

Returning residents (*toshavim hozrim*) from 2026

Long-term returning residents who re-established Israeli tax residency on or after January 1, 2026 are treated similarly to new Olim for these purposes. If you had been a non-resident for at least ten years before returning, the new reporting requirements apply to you. Shorter-term returning residents may face different rules; verify your specific status with a qualified Israeli CPA.

Pre-2026 immigrants — the old rules still apply

If you became an Israeli tax resident before January 1, 2026, your existing 10-year exemption continues under the original terms. You are not required to report foreign income or assets during your remaining exemption period. This grandfathering protection is a firm statutory commitment: the amendment does not apply retroactively to those who established residency under the old law.

In Practice: The grandfathering protection for pre-2026 immigrants is not automatic from the ITA's perspective. An immigrant who arrived in 2023 but never registered with the Tax Authority has no record on file. CRS reporting from foreign banks, Israeli property ownership databases, and Israeli bank account data will eventually surface them. The 2026 rules create a hard incentive to register proactively: those who are grandfathered in are protected, but only if they can show a documented pre-2026 residency date when the ITA comes asking. Unregistered pre-2026 arrivals should register now rather than wait.

3. What You Must Report: Worldwide Assets and Income

The Israel Tax Authority has published guidance on the categories of assets and income that must be disclosed by new residents subject to the 2026 rules. The declaration is made on a dedicated form (the current version is Form 1219, though form numbers can change — confirm with the Tax Authority website or your accountant). The items that must be reported include:

Foreign bank and brokerage accounts

  • All bank accounts held outside Israel at the date you became a resident, including current accounts, savings accounts, and term deposits
  • Investment and brokerage accounts holding shares, bonds, ETFs, mutual funds, or other securities
  • Cryptocurrency exchange accounts and self-custodied digital asset wallets with material value

Foreign real estate

  • Residential property you own or have a beneficial interest in outside Israel
  • Commercial or investment property held abroad
  • Any ongoing mortgage or charge over foreign real estate

Business interests and shareholdings

  • Shares in private and public companies outside Israel
  • Partnership interests and LLC membership units
  • Directorships or officer roles in foreign entities that may give rise to income

Pensions and retirement accounts

  • Foreign pension funds and self-directed retirement accounts (such as a US 401(k), IRA, UK SIPP, or equivalent)
  • Employer-sponsored deferred compensation arrangements

Trusts and structured arrangements

  • Any trust in which you are a settlor, trustee, or beneficiary — Israel has detailed rules on trust taxation covered separately in our guide on foreign trust taxation in Israel
  • Foundations and similar wealth-holding structures

Importantly, the reporting obligation covers assets you hold at the start of your Israeli tax residency, not just income earned during the year. You will essentially need to provide a snapshot of your global balance sheet as of the day you became a resident, and then update it annually.

4. The Tax Exemption That Still Applies

Understanding the difference between the reporting requirement and the tax liability is critical, because conflating the two leads many new immigrants to panic unnecessarily. Reporting an asset or income stream does not mean you will pay Israeli tax on it — at least not for the first ten years.

Under Section 14 of the Income Tax Ordinance (as amended), new immigrants and qualifying returning residents can claim a 10-year exemption from Israeli income tax on foreign-source income. This covers:

  • Interest and dividends earned from assets held outside Israel
  • Rental income from foreign real estate
  • Capital gains on the sale of assets located outside Israel
  • Business or professional income earned from activities conducted entirely outside Israel
  • Royalties and licensing income from foreign intellectual property

The exemption is claimed on your annual tax return. You report the income, state that it qualifies for the Section 14 exemption, and pay no Israeli tax on it. The income does not count toward your Israeli taxable base for the year.

What the exemption does not cover:

  • Income earned in Israel, including Israeli employment income, Israeli rental income, and gains on Israeli assets (these are taxable from day one)
  • Income that has a dual character — partly Israeli-source, partly foreign-source — which may need to be apportioned
  • Tax obligations in your country of origin, which Israel's exemption cannot eliminate

After the 10-year exemption period expires, worldwide income becomes taxable in Israel in the ordinary way. Planning for this transition — whether through restructuring holdings, utilizing double-taxation treaties, or taking other steps — should begin well before the period ends. See our guide on Israel's double taxation treaties for how treaty relief interacts with the domestic exemption.

5. Filing Your Israeli Tax Return as a New Immigrant

The Israeli tax year runs from January 1 to December 31, matching the calendar year. Tax returns for a given year are due by April 30 of the following year. For example, your 2026 tax return is due by April 30, 2027.

Step 1: Obtain an Israeli tax file number (*mispar tik mas*)

Every taxpayer must have a tax file number issued by the Israel Tax Authority. For new immigrants, this is typically linked to your identity number (*mispar zehut*) issued by the Ministry of Interior. If you have not yet registered with the Tax Authority, do so through the online portal at the Israel Tax Authority website or in person at your nearest tax office (*misrad mas hakhnasa*).

Step 2: Gather documentation of worldwide assets and income

Before filing, compile statements for every foreign account, asset, and income source as of the date you became a resident. This means annual statements from foreign banks, brokerage account summaries, real estate valuations, and pension account balances. Having a clear picture of your global financial position at the moment of residency establishment is the foundation of compliant filing.

Step 3: Complete the mandatory worldwide-asset declaration

In addition to the standard income tax return (Form 1301 for individuals), new immigrants subject to the 2026 rules must complete the worldwide-asset declaration form. This form requires you to list each asset, its approximate value in NIS at the date of residency, and the country where it is held. An Israeli CPA (*roach hesbon*) or tax attorney can guide you through this form, which is more involved than the standard return.

Step 4: Claim any applicable exemptions and credits

On the return itself, you will claim the Section 14 exemption for qualifying foreign-source income. If you have paid foreign taxes on the same income, Israel's network of double-taxation treaties may entitle you to a credit against any Israeli tax that does apply. Keep certificates of foreign taxes paid, as the Tax Authority can request them.

Step 5: File and retain records

Returns can be filed electronically through the Tax Authority's portal or submitted in paper form to your regional tax office. Retain all supporting documentation for at least seven years, which is the standard audit period under Israeli law.

6. Penalties for Non-Compliance

The Israel Tax Authority has indicated that enforcement of the new reporting rules will be a priority. Failure to comply — whether by not filing a return at all, filing without the required worldwide-asset declaration, or significantly understating assets — carries real consequences.

Civil penalties

  • Late filing: NIS 500 per month (or part of a month) that a required return remains unfiled, up to NIS 12,500 per return
  • Inaccurate reporting: If the Tax Authority determines that unreported or underreported assets generate income on which Israeli tax is ultimately owed, a 30% surcharge (plus interest at the statutory rate) applies to the tax deficiency
  • Failure to declare worldwide assets: Specific civil penalties apply for omission of the asset declaration, separate from any tax-related penalty

Criminal liability

Willful non-reporting of assets exceeding prescribed thresholds can constitute a criminal offense under Israeli law, with penalties including fines and, in severe cases, imprisonment. This is not a theoretical risk — the Tax Authority has prosecution infrastructure and coordination agreements with foreign tax authorities under OECD frameworks including the Common Reporting Standard (CRS).

Voluntary disclosure

If you have failed to report assets in prior years or have recently discovered that you had an obligation you did not meet, voluntary disclosure under the Tax Authority's program can significantly reduce penalties and eliminate criminal exposure. Acting proactively is far preferable to waiting to be audited.

7. Special Issues for US Citizens

US citizens living in Israel face a particular compliance burden because the United States taxes its citizens on worldwide income regardless of where they live — a feature shared by almost no other country except Eritrea. Moving to Israel and becoming an Israeli tax resident does not eliminate your US filing obligations.

Key US requirements that continue to apply:

  • Annual Form 1040: US citizens must file a federal income tax return each year, reporting worldwide income, even while claiming the Foreign Earned Income Exclusion (Form 2555) or foreign tax credits (Form 1116)
  • FBAR (FinCEN Form 114): If your aggregate foreign financial accounts exceed $10,000 at any point during the year, you must file a Foreign Bank Account Report with the US Financial Crimes Enforcement Network. Israeli bank accounts count as foreign accounts for FBAR purposes, even though you are living in Israel.
  • FATCA (Form 8938): US citizens with foreign financial assets above specified thresholds must also file Form 8938 with their US return. See our detailed guide on FATCA and FBAR for Americans in Israel.

The US-Israel tax treaty of 1994 provides mechanisms to avoid double taxation, but it does not eliminate the filing obligation. US citizens in Israel typically need both an Israeli CPA and a US-licensed accountant who specializes in expatriate returns. The cost is real, but the penalties for non-compliance in both jurisdictions are far higher.

One nuance worth noting: Israel's new 0% rate on Israeli income for 2026 arrivals means that income taxed at 0% in Israel will not generate a foreign tax credit available against US tax. If you have significant Israeli-source income in 2026 or 2027, work with a cross-border tax advisor to model the combined US-Israel liability before assuming the 0% rate benefits you net of US tax.

A South African oleh who made Aliyah in March 2026 held a portfolio of Johannesburg Stock Exchange equities worth approximately NIS 1.8 million and a rental property in Cape Town generating ZAR 12,000 per month. Unfamiliar with the new 2026 reporting requirement, he assumed the ten-year exemption meant he had nothing to report to the Israel Tax Authority. His Israeli CPA explained that while no Israeli tax would be owed on those foreign assets, Form 1219 still required full disclosure of the portfolio and the rental property on his inaugural Israeli tax return for the 2026 year, due by April 30, 2027. Filing the declaration took two additional hours of preparation, but the CPA confirmed that the South Africa–Israel tax treaty eliminated any double-taxation concern on the rental income during the exemption period. The practical lesson: the reporting obligation and the tax exemption are separate — one still applies even when the other eliminates the bill.

In Practice: The 0% rate on Israeli-source income for 2026 arrivals has a counterintuitive US tax consequence. A 2026 oleh earning NIS 1 million in Israeli employment income may pay 0% Israeli tax — generating no foreign tax credit usable against US tax. Depending on income level and the availability of the Foreign Earned Income Exclusion, the combined US-Israel tax burden in 2026–2027 can actually be higher than in later years when Israeli tax applies and generates a credit. US citizens should model the combined position before assuming the 0% rate is uniformly favorable.