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Starting 1 January 2025, Israeli families will experience major financial changes that will significantly affect their budgets. The main changes relate to the increase in utility prices, taxes and other mandatory expenses, which will lead to a significant increase in monthly expenses.
According to Ynet economic columnist Gad Lior, the average Israeli household’s expenses will increase by hundreds, and in some cases by a thousand shekels or more. The first tangible step will be an increase in municipal tax (arnona), water tariffs, VAT, insurance premiums and public transport fares.
Also, starting 1 January 2025, the electricity tariff will increase by 3.8%. This will result in additional costs for households that spend about NIS 1,000 on electricity every two months, increasing their expenses by NIS 200 per year. Business and industry have already expressed strong protest against the increase.
Another significant change will be a 1% increase in VAT to 18%, which will drive up prices for most goods and services. The water tariff will increase by 3.4%, and fuel prices could rise by 7 agorot per litre, with the potential for even higher increases given fluctuations in oil prices and the dollar.
The property tax (arnona) will increase by at least 3%, and in some regions it could reach 5.3%, adding about NIS 400 per year for a family. The cost of public transport will also increase by NIS 2, although people over 67 will continue to be eligible for free travel.
In addition, changes in tax privileges and fixing tax rates against the background of 4% inflation will result in a loss of 4% of annual income. Contributions to the social insurance fund will increase by 0.8%, and compulsory health insurance by 0.15%. The freezing of child benefits will also affect families’ budgets, with a loss of NIS 10 per child, which could amount to NIS 720 per year for large families.
Economists predict a further deterioration in the situation, including an increase in inflation by more than 1% in January, which will make living in Israel more expensive and postpone a possible reduction in the Bank of Israel’s discount rate. Currently, the rate is 4.5%, and the prime rate is 6%.
These government measures will create additional financial difficulties for Israelis in 2025, requiring them to revise their family budgets and adapt to the new economic environment.
