The 2026 state budget bill was approved by the Knesset Finance Committee on Monday morning, ahead of its final second and third readings in the plenum, which must be held by next week at the latest.
If the state budget is not approved on all three readings, the Knesset will automatically be dissolved, triggering early elections. By law, the annual deadline for the high-stakes vote is the end of March, when the fiscal year closes.
The Finance Committee’s approval of the budget followed debates that went late into the night. The second and third readings on the bill are expected to take place in the Knesset plenum on Thursday. The vote may also be pushed to Sunday.
The budget approved by the committee includes an expenditure cap of approximately NIS 699 billion.
The Defense Ministry’s budget will total about NIS 142 billion. Due to the ongoing war, the defense budget was increased by more than NIS 30 billion.
The Education Ministry’s budget will be close to NIS 97 billion, the National Insurance Institute's budget will be nearly NIS 64 billion, and the Health Ministry's budget will be approximately NIS 63 billion.
Within the overall framework, the proposal authorizes government spending of approximately NIS 850.59 billion for the fiscal year 2026. This includes a regular budget of about NIS 621.75b. and a development and capital budget of NIS 228.83 billion.
Additionally, the conditional expenditure budget for 2026 will total NIS 77.27 billion, while the commitment authorization budget will stand at approximately NIS 196 billion, the Finance Committee stated.
War costs drive 2026 budget through first vote
Due to war-related expenses, an updated version of the state budget passed its first reading in the Knesset plenum last week, following its approval in January.
To help finance the war, a 3% across-the-board cut was applied to the budgets of all government ministries, the Finance Ministry said after the update.
The updated budget increased funding for the Defense Ministry by approximately NIS 32 billion.
It also approved nearly NIS 6b. in coalition funds for 2026, with hundreds of millions of shekels directed to haredi institutions as part of the proposal. Millions of shekels were also allocated for settlements in Judea and Samaria.
MK Vladimir Beliak (Yesh Atid), a member of the Finance Committee, told The Jerusalem Post on Sunday that a record level of coalition funds expected to benefit the government is part of the state budget.
He also said there had been an attempt to allocate an additional NIS 5.8 billion and remove legal oversight from the sum.
Beliak said the opposition and his party identified the move in the Finance Committee and prevented it so that a legal mechanism was applied to those funds.
After the committee decision to approve the budget, Beliak added, “We did the maximum under not-so-simple conditions: We asked thousands of questions, made it difficult for the coalition, and blocked an attempt to divert NIS 5.8 billion for sectoral politics.”
“Later this week, we will continue the struggle in the Knesset plenum. We will not give up. We will change this skewed set of priorities after the upcoming elections,” he added.
Finance Minister Bezalel Smotrich welcomed the committee’s vote, stating that the budget was “a good and responsible one, addressing all the needs of the war on both the frontlines and the home front, while also ensuring that the strong macroeconomic performance of Israel’s economy reaches the pockets of its citizens.”
“In the upcoming budget, alongside an increase in the defense budget, there are also positive developments for Israeli citizens, such as tax reductions for reservists, the middle class, and immigrants, as well as structural reform to open the banking market to competition,” the finance minister added.
Finance Committee chair MK Hanoch Milwidsky (Likud) thanked the panel after the final approval vote, adding, “May we know better budgets.”
During the state budget’s first reading in January, the main haredi parties, Shas and United Torah Judaism, threatened to vote against it unless they received various concessions. This led to a coalition crisis until agreements were reached, allowing the budget to ultimately pass its first reading.