The 2026 state budget bill was approved by the Knesset’s Finance Committee on Monday morning, ahead of its final second and third readings in the plenum.
The decision followed debates in the committee that went late into the night. The second and third readings are expected to take place in the Knesset plenum on Thursday, the Finance Ministry told The Jerusalem Post.
If the state budget is not approved in all three readings, the Knesset will automatically dissolve, triggering elections. The annual deadline for the high-stakes vote is the end of March, by law, when the fiscal year closes.
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 budget nearly NIS 64 billion, and the Health Ministry budget approximately NIS 63 billion.
Within the overall framework, the proposal authorizes government spending of approximately NIS 850.59 billion in the fiscal year of 2026. This includes a regular budget of about NIS 621.75 billion 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 was passed in its first reading in the Knesset plenum last week, after the draft was approved 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 6 billion 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 Post on Sunday that a record level of coalition funds expected to benefit the government are part of the state budget.
He also said that there had been an attempt to allocate another 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 chairperson 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, haredi parties - Shas and United Torah Judaism - had threatened to vote against it if they did not receive various concessions. This led to a coalition crisis until agreements were reached, allowing the budget to ultimately pass its first reading.