New “Wealth Tax” Targets Eretz Yisrael’s Richest

Beginning today, January 1, 2025, a new law has come into effect in Eretz Yisrael, requiring the country’s wealthiest households to pay additional taxes. The Ministry of Finance introduced this measure to reduce the national deficit, especially in the wake of the recent war.

This “rich tax” targets the top 0.01% of families in Israel, whose incomes exceed NIS 20 million annually (around 5.47 million US dollars as of January 1, 2025). These households primarily earn through investments, real estate, and other passive income sources rather than wages. The new tax applies an additional 2% to capital income above the current ceiling of NIS 721,560 annually (197,456 US dollars).

For perspective, around 2,500 families – representing the wealthiest in the nation – will shoulder 75% of the new tax burden. The Finance Ministry estimates the policy will generate an extra NIS 1 billion for the state this year, rising to NIS 1.5 billion annually in subsequent years.

The change reflects efforts to address significant income disparities in Israeli society. Data shows that the top 1% earned 70% of the country’s total capital income in 2021. By focusing on passive income, this law seeks to ensure that those with the most resources contribute more toward the nation’s recovery.

This initiative also includes higher taxes on investment properties, expected to add NIS 420 million (115 million US dollars) annually to the treasury.