Israel’s Parliamentary Finance Committee approved the 2025 state budget on 23 March 2025.
The bill proposes that the net state budget for 2025 will stand at about NIS 755.9 billion – the total budget for calculation of the expenditure limit will stand at about NIS 619.6 billion, which is an increase of 20.6% relative to the expenditure limit in 2024, mainly resulting from an increase in defence expenditures.
The budget for debt repayment, with the exception of debt repayment to the National Insurance Institute, stands at about NIS 136 billion. The Ministry of Defense budget is the highest budget in the budget proposal for 2025, at about NIS 109.8 billion, along with about NIS 78 billion in spending authorisation.
Finance Minister Bezalel Smotrich aimed to pass the budget by late 2024, but coalition infighting caused delays. It’s unclear when parliament will vote on the budget, which includes tax hikes to address a 6.8% deficit in 2024 that led to credit rating downgrades as Israel continues with its military funding.
Earlier, Israel’s government passed the 2025 budget on 1 November 2024. It includes tax hikes, like raising the VAT rate from 17% to 18%, and spending cuts across most ministries. The Cabinet states that these measures are needed to fund the ongoing war with Palestine, now in its second year.
