The Finance Minister has proposed a temporary tax on banks’ excess profits for five years and approved a higher tax-free import threshold.
Israel’s Ministry of Finance has proposed a temporary tax on banks’ excess profits and approved a higher tax-free import threshold in an announcement on 23 December 2025.
The initiative is aimed at easing pressure on consumers but was criticised by lenders and local businesses.
Israel’s Finance Minister Bezalel Smotrich said he plans to introduce legislation imposing a 15% tax on what he described as “excess” profits earned by commercial banks during the recent period of high interest rates.
The levy would apply to profits exceeding 50% of banks’ average earnings between 2018 and 2022 and would remain in place for five years.
The proposal follows a sharp tightening of monetary policy by the Bank of Israel, which raised interest rates from 0.1% in 2022 to a peak of 4.75% to curb inflation.
Smotrich also approved a directive raising the personal import threshold for goods entering Israel without value-added tax to USD 150, up from USD 75. While the move is intended to benefit consumers, local businesses have warned it could hurt domestic retailers.
Earlier, on 15 January 2024, Israel’s Ministry of Finance proposed to increase the tax rate on bank profits from 17% to 26% in both 2024 and 2025.
