26/02/2026
Major Barrier to U.S. Aliyah Removed: Five-Year Exemption from Israeli National Insurance Contributions
In a significant legislative development, the Knesset has approved a reform that may materially affect thousands of American Jewish families considering aliyah.
On February 25, 2026, the Knesset enacted Amendment No. 262 to the National Insurance Law, initiated by MK Simcha Rothman, granting new immigrants from the United States a five-year exemption from Israeli National Insurance contributions on employment and self-employment income for which U.S. social security taxes are paid.
The reform addresses a long-standing structural issue: Israel and the United States do not have a totalization agreement preventing double social security contributions.
As a result, U.S. citizens making aliyah were often required to pay U.S. social security taxes while simultaneously being subject to Israeli National Insurance contributions, creating a material double burden and a meaningful deterrent to relocation.
According to Nefesh B’Nefesh, one of the key proponents of the initiative, the absence of coordination between the two systems has been a significant financial obstacle for many American families evaluating a move to Israel.
The exemption applies solely to Israeli National Insurance contributions and does not extend to health insurance contributions.
Importantly, to prevent adverse consequences regarding benefit eligibility, the law establishes a protective mechanism: for purposes of benefits or supplements that are conditioned upon payment of National Insurance contributions, income earned during the exemption period will be deemed as if contributions had been paid.
At this stage, the amendment applies only to immigrants from the United States.
The legislative rationale includes the absence of a bilateral social security agreement, comparable contribution rates between the two countries, and the substantial aliyah potential from the U.S. Nevertheless, the Minister of Labor is authorized to extend the arrangement to additional jurisdictions in the future.
The amendment has been enacted as a temporary measure for a ten-year period, with the possibility of two additional extensions of up to five years each.
From a broader economic perspective, this reform joins a series of recent measures designed to encourage aliyah.
These include a temporary income tax exemption for new immigrants relocating between 2026 and 2030, capped at NIS 1 million per year, alongside the existing ten-year exemption on foreign-source income.
At the same time, beginning in January 2026, the reporting exemption for new immigrants will be repealed, underscoring the importance of careful, forward-looking tax planning.
For individuals and families considering aliyah from the United States, the removal of the double social security burden may significantly improve the overall financial model.
However, a comprehensive cross-border analysis remains essential, taking into account the interaction between Israeli and U.S. tax and social security regimes before making a final decision.
