Knesset Approves Tax Breaks for Dozens of Communities in Judea and Samaria

The Knesset plenum approved overnight, between Wednesday and Thursday, in its second and third readings, the tax benefits law for communities along the eastern conflict line in Judea and Samaria. The proposal, initiated by MKs Zvi Sukkot and Limor Son Har-Melech of the Religious Zionism party, passed by a majority of 32 Knesset members to 23 opponents.

The law grants tax benefits to residents of communities in Judea and Samaria located east of the security barrier, where some or all residential homes are situated more than two kilometers in a straight line from the barrier. The measure applies to about 58 to 60 communities, which will receive a 7% income tax credit—the lowest among the existing benefits in other conflict-line areas in Israel. The benefit could amount to savings of up to 10,000 shekels per person per year.

For a community to be defined as a "benefited community" and qualify for the tax break, it must meet several cumulative conditions as of December 31 preceding the tax year: transportation of students to and from the community is permitted only in bulletproof vehicles, according to publications by the Defense Ministry; the community is ranked in cluster 6 or below on both the peripherality index and the socioeconomic scale; and the establishment of the community was legally approved. A resident who lives in a benefited community for the entire tax year will be eligible for the credit, and anyone entitled to several different benefits will be able to choose among them.

The law is defined as a temporary order that will take effect retroactively from January 2026 and remain in force until December 31, 2027. Finance Minister Bezalel Smotrich will be authorized, with the approval of the Finance Committee, to extend it by order for additional periods of up to two years at a time.

Smotrich welcomed the law’s approval: "Tonight we completed the correction of a historic injustice. Since Sharon’s expulsion government, the residents of Judea and Samaria have been discriminated against even though they stand courageously and heroically on the front line of the State of Israel. Starting today, they are no longer second-class citizens." Smotrich added that "the tax benefits approved tonight, which are meant to encourage settlement in challenging areas, are another step toward the goal of one million residents in Judea and Samaria, and a strategic move that will strengthen Israel’s security belt."

Smotrich also said that "even after the law’s approval, the tax benefit in communities in Judea and Samaria will still be the lowest—just 7%—while in northern communities, the Gaza envelope, and additional cities, there are benefits that are two and even three times higher." Addressing critics of the law, he said that "anyone trying to turn this into a struggle between Judea and Samaria and the north, which gets nothing, is simply lying."

During the late-night vote, coalition MKs who live in Judea and Samaria chose to go up to the podium and make a "full disclosure" statement about their place of residence. National Security Minister Itamar Ben Gvir also approached the microphone and said: "There is no need for any full disclosure. I am a proud resident of Judea and Samaria, and every law we pass supposedly requires full disclosure. What angers you is the very fact of living in Judea and Samaria."