Treasury compromises on electric car tax hike

Purchase tax on electric cars from January will rise from 45% to 48%, instead of 52%, as the Ministry of Finance initially wanted.

Israel’s Ministry of Finance and the Knesset Finance Committee have reached a compromise on the level of purchase tax for electric cars starting January 2026. Under the terms of the compromise, purchase tax on electric cars will rise from 45% to 48% instead of 52% as the Ministry of Finance initially wanted. However, at the same time, the maximum amount of the tax benefit in shekels has “shrunk” by an additional NIS 8,000 and will be only NIS 22,000 shekels instead of NIS 30,000 according to the original plan of the Ministry of Finance.

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Sources at the Ministry of Finance claim that the compromise will encourage the import of cheaper electric vehicles “at the expense” of luxury electric vehicles, for which the tax benefit becomes negligible. This means that the prices of electric vehicles will climb on the price lists at the beginning of 2026 at a relatively moderate rate. This is due, among other things, to large stocks of unsold electric vehicles, which are still offered at major discounts.

Published by Globes, Israel business news – en.globes.co.il – on December 29, 2025.