Finance Ministry Reportedly Weighs Parent Tax-Credit Cuts for Higher-Earner Relief

Finance Ministry officials are reportedly examining reductions in working parents’ tax credits to help finance income-tax relief for people earning NIS 25,000–53,000 a month. The options are being prepared for the next budget, potentially covering 2027–2028. None of the proposals has been approved, and adoption would depend on the incoming government and finance minister. An internal committee comprises Budgets Commissioner Maharan Froznfar, Chief Economist Dr. Shmuel Abramson and Tax Authority Director Shay Aharonovich. Senior officials established it on their own initiative, without a government decision or ministerial directive, according to the report. Eight teams are examining changes to taxes, exemptions and benefits. Ministry sources put the annual cost of parents’ tax credits at about NIS 14.5 billion; benefits for residents of eligible communities are also being considered for reductions. Other options include ending the rental-income exemption and taxing receipts from the first shekel. Ministry sources estimate that change could raise about NIS 1 billion a year; it would require Knesset legislation. Officials are also examining reduced tax benefits for continuing-education savings funds and reinstating an annual tax on vacant land, which was abolished in 2000. The collection proposals include immediate online VAT settlement and extending the Israel Invoices system to invoices from the first shekel. Some proposals are expected to reach the finance minister in the coming days, with full recommendations expected in the coming weeks.