Changes that will affect personal finances in 2026

From investment provident funds to income tax, a range of measures will need to be taken into account.

Investment provident funds

In accordance with the latest Consumer Price Index reading, the maximum permitted deposit per person in an investment provident fund (kupat gemel lehashka’a) for 2025 will be NIS 83,641. This is a worthwhile investment instrument for those prepared to save for the long term. Its great advantage, besides the ability to switch between investment houses and investment tracks without triggering a tax event, is an exemption from capital gains tax if the money is withdrawn after age 60 in the form of a monthly payment. In the past two years, the aggregate amount invested in this instrument has risen by 80% to NIS 78 billion.

It should borne in mind that the ceiling for obtaining an exemption from capital gains tax is likely to be lowered, assuming that the new legislation following the recommendations of the "arbitrage committee" is completed. The legislation will mean smaller tax benefits, but more uniform tax treatment and regulation of the various savings instruments, some of which currently carry no tax advantage.

Mutual funds: Management fees to rise

It can be said with near certainty that for many funds management fees will rise. This is the view of players in the sector, and the truth is that this is what happens every year. Last year, management fees rose for 250 funds (out of 2,300). This year, the number of funds has risen to 2,435, managing an aggregate NIS 759 billion. The funds’ assets under management have thus risen 27% in comparison with the end of last year, and have doubled within three years.

It can also be assumed that management fees on money market funds will also rise again, although it must be added that they are still low (0.1-0.2%), and that previous rises have only made these funds non loss-making for the investment houses. For the public, money market funds are much more attractive than equivalent bank deposits, both in their returns and in their tax treatment.

Pensions: Tax exemption to rise slightly again

This year, the ceiling for the tax exemption on monthly pension payments was supposed to rise to 67% of an upper threshold of NIS 9,340. In the end, the rise was spread over several years. In the coming year, the ceiling will rise slightly, by NIS 47, to NIS 5,422 monthly. In January 2027 it will rise to NIS 5,893 monthly, and in January 2028 the exempt amount will reach the 67% level, and will amount to NIS 6,318.

Advanced training funds: Benefits eroded

Self-employed people who invest in an advanced training fund (keren hishtalmut) benefit from the fact that the maximum amount that can be invested with an exemption from capital gains tax rises every year. This year it is NIS 20,566.

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For salaried employees, this benefit has been steadily eroded. The ceiling is 10% out of a monthly salary of NIS 15,712, i.e., NIS 18,854 annually. The Ministry of Finance has been trying for years to abolish this tax benefit altogether, without success, but inflation has eroded it over the years by about 50%.

Saving for every child: State to give more

The savings scheme for children "Saving for Every Child" launched in 2017is linked to the Consumer Price Index. The program enables children to start adult life with tens of thousands of shekels. The state deposits a monthly amount for each child, and parents can double the amount out of their child allowance. This year the amount was frozen at NIS 57 monthly per child from the state. It is due to rise by about 2%, or about one shekel.

Since the beginning of 2025 parents who opened the savings account for their children at a bank have been able to instruct the National Insurance Institute to transfer future payments to an investment house, where returns are generally higher. Since it’s a matter of saving for at least 18-20 years, the experts recommend saving on higher risk investment tracks at the investment houses, rather than with the banks. Since the program was launched, almost NIS 29 billion have been accumulated under it at the investment houses and insurance companies, representing a 55% rise in the past two years.

Income tax: Will brackets be widened?

The biggest sweetener that the public might receive in 2026 is a widening of the 20% and 31% income tax brackets. This will mean that anyone who earns over NIS 16,000 monthly will pay less income tax. The 20% bracket will start at 10,061, as it does today, but will be widened to finish at NIS 19,000 (instead of the current NIS 16,150). The next bracket will begin at NIS 19,001, and will finish at NIS 25,100 (instead of the current NIS 22,440).

Income tax payments are determined on an annual basis, and are collected monthly, but since the change requires legislation, its application will depend on when the government passes the budget. The change will therefore not take place at the beginning of the year. When it does come into force, it will affect net pay in the following months.

Published by Globes, Israel business news - en.globes.co.il - on December 24, 2025.

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