Wealthy Israelis leaving in growing numbers, costing state billions in lost tax revenue

A new Israel Tax Authority study finds that emigration among Israel's top earners has surged since the pandemic, with high-tech and healthcare professionals leading the exodus. The shift is costing the state an estimated 1.2 billion shekels ($400 million) annually in lost tax revenue, a figure researchers warn could nearly triple within five years. The number of Israelis emigrating has risen by about 50% since the end of the Covid pandemic, but the sharper change is in who is leaving, according to a study by the Tax Authority's Planning and Economics Division. The study, authored by Dr. Ariel Greizaz and Nili Ben-Tovim, examined the income and tax payments of Israelis who left the country between 2015 and 2024.

Annual tax losses from departing high earners rose from about 500 million shekels ($166 million) before 2019 to roughly 1.2 billion shekels ($400 million) in 2023 and 2024, an increase far outpacing the rise in the number of emigrants. If the trend continues, researchers estimate the annual loss could reach 3.5 billion shekels ($1.16 billion) within five years.

The average annual income of emigrants jumped about 60% in real terms since 2020, from roughly 125,000 shekels ($41,000) to about 200,000 shekels ($66,000) in 2024, now around 50% above the national average. The emigration rate among the top 10% of earners climbed from 0.3% to more than 0.5% by 2024, a jump of about 80%. That percentage alone accounts for 67% of total emigrant income and 86% of the resulting tax loss, while departure rates among lower-income groups have held steady or slightly declined.

The 40-50 age bracket, typically at peak earning years, saw its emigration rate rise from 0.4% to 0.7% in 2024, with its share of adult emigrants growing from 13% to 20% over the past decade. The number of high-tech workers leaving has risen by about 150%, and healthcare sector departures have more than doubled, while education and industry have seen little change. Researchers noted they could not determine whether the shift stems from pandemic-era labor market changes or from the political and security turmoil Israel has faced since 2023.

The Tax Authority cautioned that the figures represent a potential rather than confirmed loss, since residency status for tax purposes is often only determined retrospectively.