Israel’s Knesset passed legislation today (Thursday) granting tax benefits to communities along the “Eastern confrontation line” in Judea and Samaria. The bill, sponsored by Knesset members Tzvi Sukkot, Limor Son Har-Melech, and several others, passed its second and third readings with 32 votes in favor and 23 against.
The new law offers tax credits to communities in the “Eastern confrontation line zone” in Judea and Samaria. Towns located within 2 kilometers from the separation barrier.
For a town to qualify as a “preferred community” and for its residents to receive the tax credit, it must meet four strict conditions as of December 31 before the tax year. First, student transportation to and from the town must be permitted only in armored vehicles, according to Defense Ministry publications.
Additionally, the town must be classified in cluster 6 or lower on the periphery index and cluster 6 or lower on the socioeconomic scale. The final condition requires that the town’s establishment was legally authorized.
Residents who live in a qualifying communties for the entire tax year will be eligible for a tax credit according to the rate and ceiling set in the Income Tax Ordinance. The law allows residents to choose between this credit and another if they qualify for multiple benefits.
The law takes effect retroactively from January 2026 and will remain in force until December 31, 2027. Finance Minister Bezalel Smotrich will be authorized, with approval from the Finance Committee, to extend the law’s validity by order for additional periods not exceeding two years each.
The bill’s explanatory notes clarified the main rationale behind the initiative. The government’s national priority map, established in August 2013, includes communities in Judea and Samaria that face security threats, but until now the criterion of security threat has not been factored into eligibility for tax benefits. The current law aims to correct the existing situation and enable the tax credit for residents.