10-Year Tax Exemption Advice: A Year-by-Year Planning Checklist for Olim

Israel's 10-year exemption on foreign-source income is one of the most valuable tax benefits any country offers immigrants. But it is a window, not a permanent status, and the rules reward people who plan. Our 10-year exemption guide explains the law. This page is the practical advice: what to do, and when.

Before Aliyah: 6 to 12 months out

Confirm which status you will have

First-time residents are Olim Hadashim. Israelis returning after at least 10 consecutive years abroad are Toshavim Chozrim Vatikim and get the same exemption. Returning after 6 to 9 years gives only a 5-year exemption on passive income. If you are close to the 10-year line, work out the exact dates first. See Oleh Hadash vs Toshav Chozer Vatik.

Build an asset and income inventory

List every foreign bank account, brokerage account, pension, property, business interest and equity grant, with values and cost basis around your Aliyah date. You will need it for the new informational reporting, for proving what is foreign-source, and for year-11 planning.

Review equity grants

Options and RSUs granted before Aliyah may be partly foreign-source, depending on where you worked during vesting. Grants after Aliyah usually fall under Section 102 or Section 3(i). Collect grant letters and vesting schedules before you move.

US citizens: clean up your investments

Avoid buying Israeli mutual funds after the move, since most are PFICs for US purposes. Consider consolidating 401(k)s into an IRA before the move, since many US recordkeepers do not accept Israeli addresses. Read Aliyah from the US.

Years 1 to 7: protect the exemption

• Keep income streams separate. Hold foreign-source income in foreign accounts and Israeli income in Israeli accounts. Mixing makes the foreign source harder to prove.
• File the informational reports. From 2026, new Olim must report foreign income annually even though it is exempt. See New Olim reporting 2026.
• Don't assume remote work is exempt. Work done while you live in Israel is Israeli-source, even for a foreign employer. See remote work tax.
• Use your Oleh tax credit points. Check that your Israeli payslip applies them.
• Coordinate with US filings. US citizens keep filing Form 1040 and FBAR every year. See US expat tax in Israel.
• Think before bringing assets "home". Moving foreign assets into Israeli structures can turn exempt income into taxable Israeli income.

Years 8 to 10: the planning window

From the first day of year 11, all worldwide income becomes taxable in Israel with full reporting. The last three years are when planning pays off most:

1. Map unrealized gains. Identify foreign assets with large embedded gains and consider realizing them while still exempt.
2. Plan pension distributions. 401(k) and Traditional IRA distributions are exempt now and taxable later. Roth accounts need special care because Israel has no Roth concept. See 401(k) after Aliyah.
3. Review trusts and holding companies. Foreign trusts and companies can change treatment at year 11. See foreign trusts and Olim.
4. Set up year-11 reporting. Make sure statements, cost basis and foreign tax records are ready for full worldwide reporting.
5. Check the treaty position. For US citizens, model how the US-Israel treaty and foreign tax credits work once Israel starts taxing. See US-Israel tax treaty.

Common planning mistakes

• Selling a large foreign position in January of year 11 instead of December of year 10
• Skipping the 2026 informational reports because "it's exempt anyway"
• Treating a remote salary as foreign income
• Returning residents missing the 10-year threshold by a few months
• Planning the Israeli side without the US side, or the other way round

Quick checklist

• Status and residency start date confirmed
• Asset inventory with values at Aliyah
• Equity grants reviewed
• Foreign and Israeli accounts kept separate
• Annual informational reports filed
• Year-8 review booked in your calendar

Estimate the value of your exemption with the Aliyah tax savings calculator.