Israel's Ministry of Finance announced that the Knesset has given final approval to the 2026 state budget, setting total expenditure at about ILS 699 billion and updating the 2026 deficit ceiling to 4.9% of GDP, with a major increase in defence spending linked to the ongoing security campaign. The defence budget increases by ILS 32 billion to around ILS 143 billion, compared with ILS 65 billion in October 2023. The package also widens personal income tax bands to reduce income tax payments and approves a “small banks” reform aimed at increasing competition in the banking system and lowering interest rates for small and medium-sized enterprises and households, with the reform expected to generate public savings of billions of shekels. Additional allocations include ILS 5 billion for rehabilitation of communities around Gaza and the northern confrontation line, ILS 6 billion for reservist support, ILS 97 billion for education (up 7.9% year on year), ILS 7 billion for transport infrastructure, a multi-year ILS 5 billion investment in AI, high-tech and government digitisation, and budget increases of about ILS 4.3 billion for health and ILS 1.8 billion for welfare (up about 14.4%).
Ministry of Finance (Israel) 2026-04-09
Israel's Ministry of Finance reports final Knesset approval of the 2026 budget with ILS 699bn spending and a 4.9% deficit ceiling
Israel’s Ministry of Finance announced final Knesset approval of the 2026 state budget, setting expenditure at about ILS 699 billion and raising the deficit ceiling to 4.9% of GDP, driven by a major increase in defence spending. The defence budget rises by ILS 32 billion to around ILS 143 billion, alongside widened personal income tax bands and a “small banks” reform to boost competition and lower borrowing costs. The budget also allocates additional funds for Gaza-border and northern community rehabilitation, reservist support, education, transport, AI and digitisation, health, and welfare.