Israel’s government on Friday approved a 2026 state budget totaling 662 billion shekels ($205 billion), according to statements from the Prime Minister’s Office and Finance Ministry.
The plan, which requires parliamentary approval by March, is slightly higher than this year’s budget, initially set at 619 billion shekels and later revised to 650 billion due to war costs. The deficit ceiling for 2026 is set at 3.9% of GDP, down from 5.2% this year.
Officials said the budget is aimed at restoring growth and fiscal discipline after two years of expanded wartime spending. Defense spending will reach 112 billion shekels, lower than wartime levels but 47 billion more than in 2023.
The package also includes an income tax cut, reforms to dairy imports to lower consumer prices, and more than 3 billion shekels for artificial intelligence development.