Last-Minute Win for the Coalition: Israel Passes 2026 Budget, Avoids Early Elections

A tense night in the Knesset ended with the approval of the state budget for 2026, as the plenum passed it by a majority of 62 to 55 against. The Arrangements Law passed alongside it, less than 48 hours before the legal deadline. That averted the dissolution of the Knesset and early elections.

The approved budget includes broad adjustments in the wake of Operation "Roar of the Lion," and sets government spending at a record roughly 850.59 billion shekels. Of that, the regular budget will total about 621.75 billion shekels, while the development budget and capital account will come to about 228.83 billion shekels. The expenditure ceiling for budget calculations was set at about 699 billion shekels.

Overnight, the coalition managed to hold its parliamentary majority through prolonged rounds of votes. On the other side, the opposition took a hit after mistakenly voting in favor of amendments that enabled additional funding for the Haredim.

Minister in the Finance Ministry, Ze'ev Elkin, jabbed at the opposition: "Right now in the Knesset votes on the state budget: an event I don't remember the likes of in many years. The opposition, led by Yair Lapid, neglects to check what they are voting on and votes in favor of the Haredim's amendments to add funding for yeshivas. About 100 members of Knesset supported increasing the yeshiva budget."

Against the security backdrop, the Defense Ministry posted the most notable rise in its budget, which will reach more than 142 billion shekels—an increase of over 30 billion shekels compared with the original plan. In addition, the Education Ministry's budget will be about 97 billion shekels, National Security about 64 billion, and the Health Ministry about 63 billion. Additional ministry budgets include about 5.5 billion shekels for the Prime Minister's Office, about 5 billion for the Justice Ministry, about 4.5 billion for the Economy Ministry, and about 3.34 billion for the Foreign Ministry.

To meet a deficit target of 4.9% and finance the costs of the operation in Iran, the Knesset approved a 3% across-the-board cut to all government ministries. In addition, as part of understandings with the banking system, it was decided that the banks will transfer a one-time 3 billion shekels to the state treasury, instead of imposing an additional tax on their profits. State debt payments (excluding the National Insurance Institute) are expected to total about 151.81 billion shekels.

Finance Committee chair MK Hanoch Milwidsky welcomed the budget's approval: "I want to note the work done in the Finance Committee, which was conducted in a businesslike manner. Opposition members stood their ground firmly and with vigor and gave us a lot of work, but in the overwhelming majority of cases they did it from a good place—concern for the public and a desire to improve and streamline."