Israel's Lowest-Paid Reservists Win a Monthly Top-Up

The Knesset Finance Committee advanced a reworked bill expanding financial support for Israeli military reservists on Monday 17 November 2025, ending a standoff over how the money should be shared out. Lawmakers had frozen the earlier version after warnings that it favoured higher earners and left reservists below the income tax threshold with, as opponents put it, “little to show for their service.”

The new draft drops reliance on tax credits alone. It guarantees a direct monthly supplement to reservists whose incomes fall below the point at which income tax is paid: an average of NIS 3,000 (about $926) for each month served, lifting earnings during reserve duty to roughly NIS 9,800 (about $3,026). The committee said the benefit, at that point temporary and due to lapse in late 2025, would become a permanent entitlement if the bill passed. The measure went on to the Knesset plenum for its final readings.

Why a tax credit was the wrong tool

A tax credit is worth nothing to someone who pays no tax. That is the whole of the dispute, and it explains why the earlier bill stalled. The committee chair, Hanoch Milwidsky, said the revised text rested on “two pillars”: real support for reservists left out by the original formula, and a mechanism allowing the law to be recalibrated as the military reduces its reliance on long reserve rotations.

The bill still gives the largest tax credit to reservists who log at least 110 days a year, but it requires that threshold to fall in 2028, when the Israel Defense Forces expects to shorten reserve commitments. Milwidsky said the mechanism would mean the top-tier benefit applies to “most reservists in practice, not only a select few.” The Times of Israel reported the same day that under the earlier draft reservists earning below the tax threshold would have seen little or no gain while higher earners took the full benefit.

The minimum wage decision the day before

The committee acted a day after the government made the higher minimum wage for reservists permanent, setting monthly compensation at about NIS 9,600 (roughly $2,964). That rate had been introduced as a temporary wartime measure at NIS 9,632 (about $2,974) a month, or around NIS 321 ($99) a day, and was due to expire at the end of 2025. Without the change, compensation would have reverted to about NIS 7,000 ($2,161) a month: significant, officials said, for unemployed or low-income reservists whose pay is tied to the minimum wage. The annual cost of the increase was put at NIS 530 million (about $163.6 million).

The government cautioned that if reservist numbers rise sharply the fixed annual budget could reduce the actual per-person payment, because the decision allocates a sum of money rather than setting a binding minimum level of compensation.

How heavy the reserve burden has been

The argument over money follows two years in which reserve service stopped being an occasional interruption. The Israel Defense Forces reported that reservists served an average of 94 days in 2024 and 78 days in 2025, and that 37 per cent of reservists are parents, The Times of Israel reported in June 2026.

The economic effect has been measured too. The Israel Democracy Institute found that reserve duty consumed under 0.1 per cent of Israel's working hours before October 2023, jumped to about 5 per cent that month (roughly 130,000 workers absent) and settled at around 1 per cent by mid-2024. The state budgeted NIS 8.2 billion for reservist compensation in 2023 and about NIS 4 billion in 2024, against a pre-war average of NIS 1.6 billion a year.

What happened next

The Knesset passed the law on 19 November 2025 by 26 votes to none, with the benefit starting in January 2026 and applying retroactively to 2025 service, according to The Times of Israel. The same report records that the delay had prompted Finance Minister Bezalel Smotrich's Religious Zionism faction to withhold its votes from the coalition for close to a week until a compromise was announced.

What is still unclear

The committee did not publish an estimate of how many reservists fall below the tax threshold and would receive the direct supplement, nor the total cost of the reworked scheme. It did not say what the 110-day threshold will fall to in 2028, or who decides.