Bill to increase tax deductions for new olim passes Finance Committee

The bill, which still needs to pass three votes in the Knesset plenum, will add to the sum of the deduction that olim are entitled to, as well as lengthen eligibility from 42 to 54 months.

Olim arriving in Israel (photo credit: DAVID SALEM-ZOOG PRODUCTIONS)
Olim arriving in Israel
(photo credit: DAVID SALEM-ZOOG PRODUCTIONS)

A bill that will add one tax-deduction point for new olim and lengthen its use by a year has been approved, the Knesset Finance Committee said Tuesday.

New immigrants are currently eligible for income-tax deductions that gradually decline during their first three and a half years in the country. Most of the deductions focus on their first 18 months, and they add up to 7.5 tax-deduction points. Each point is worth NIS 223 per month for 2022.

However, less than a third of olim actually gain from the current situation, since many spend their first year or two studying in an ulpan, taking part in army preparatory programs or working in low-paying jobs that do not reach the lowest income-tax bracket.

The new bill would add another year of eligibility, which will increase to 54 months, and increase the size of the deduction from 7.5 to 8.5 points.

 The Finance Committee meets in the Knesset, June 2021 (credit: YONATAN SINDEL/FLASH90) The Finance Committee meets in the Knesset, June 2021 (credit: YONATAN SINDEL/FLASH90)

The goal is to encourage aliyah and to allow olim to enjoy their rights to the maximum, the committee said.