The Knesset passed a bill on Wednesday that exempts US olim (new immigrants) who are obligated to pay US Social Security taxes from making National Insurance Institute (NII) contributions for five years after they make aliyah.
The bill, which is intended to prevent double payments, passed its second and third readings unanimously in the Knesset plenum. It will function as a temporary provision for 10 years and as an amendment to the existing National Insurance Law.
The bill was sponsored by Religious Zionist Party MKs Simcha Rothman and Ohad Tal (Religious Zionist Party), and Yesh Atid MK Merav Ben Ari.
It would correct an ongoing injustice and encourage aliyah from the US by removing financial burdens, Rothman’s office said.
Rothman cited data from Nefesh B’Nefesh that indicates the NII obligation creates a barrier for olim, causing some to either avoid or delay making aliyah.
Israel and the US face a unique situation because there is no agreement between the two countries to prevent duplicate payments for social insurance, Rothman’s office said.
“The United States is unique in that it imposes high Social Security payments not only on US residents but also on its citizens who are residents of Israel, thereby heavily burdening the livelihood of US citizens living in Israel,” it said.
NII contributions are mandatory payments for residents aged 18 and older and are calculated based on income. They are also determined based on employment status, whether as an employee, self-employed, or not working. In some cases, marital status also is a factor.
Sum is based on employment status
The bill stipulates that it will apply to US olim who have the status of both employed and self-employed for a period of five years from the date of aliyah. The exemption will not affect the obligation to pay health insurance.
As part of the provision, the Treasury will compensate the NII for the amount of contributions covered by the exemption. The exemption will not affect olims’ eligibility for a benefit that is conditional upon payment of contributions.
Though the decision is limited to 10 years, the bill stipulates that the labor minister may extend the temporary provision by two additional periods, each not exceeding five years.
Any extension would require consent from the finance minister, consultation with the aliyah and integration minister, and final approval from the Knesset Labor, Welfare, and Health Committee.
Following the bill’s passage, Rothman said previous attempts to advance the legislation had encountered difficulties.
“I am happy that in this Knesset we succeeded in doing it for the sake of the olim,” he said.
Rothman called on Diaspora Jews to make aliyah.
“I call on our brothers overseas: Come and immigrate to Israel,” he said. “It has always been the right choice, and today even more so, as we have succeeded in removing an unnecessary and burdensome economic barrier.”