Israel introduces tax on departing flights

Israel plans to introduce a new tax on departing flights, which will affect both airlines and passengers. The measure is aimed at combating pollution and replenishing the budget, and its parameters are comparable to similar taxes in the UK, France and Germany.

In early November, Rashut al-mas (the Israel Tax Administration) published a position paper proposing a new tax on all departing flights. According to the agency, this measure can bring the state about 1.1 billion shekels annually, and for passengers will result in additional costs: about 12 shekels for domestic flights, 58 shekels for a medium-range flight (mainly to Europe) and 274 shekels for long-haul routes such as the United States or East Asia. In terms of the cost of the ticket, the tax will be about 4-5% of the average price, which, according to experts, can affect the demand and structure of the air transportation market.

The economic consequences for airlines and passengers, according to analysts, will be expressed not only in a direct rise in ticket prices, but also in the need to revise tariff policy and optimize routes. For low-cost carriers, where ticket price is often a key selection factor, even a slight increase in cost can lead to lower flight loads. At the same time, the state expects that the additional revenue will help to finance projects to reduce the negative impact of aviation on the environment and offset health and infrastructure costs associated with noise and air pollution near airports.

As a justification for the new initiative, Rashut al-Mas points out that aviation contributes significantly to global warming, as well as creates local environmental problems. Unlike road transport and industry, where taxes take into account environmental damage, the aviation sector in Israel has so far been virtually exempt from such charges: international flights are exempt from VAT, and fuel for aircraft is exempt from excise duties. In recent years, the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) system has been in place, requiring airlines that exceed a certain level of emissions to purchase “compensation units” from environmental projects. However, this mechanism is considered too soft and does not provide sufficient incentives to reduce emissions, as evidenced by the experience of several European countries.

International practice shows that Israel is not a pioneer in this regard. In the UK since 1994, there is an Air Passenger Duty tax, which is levied on each passenger and depends on the flight range and class of service. For example, according to the BBC, in 2026 the minimum rate for economy class on short routes is £13, and on long-distance routes - up to £91. Since 2020, France has introduced an eco-contribution, which varies from 1.5 to 18 euros depending on the direction and class, as well as a separate TSBA tax aimed at developing transport infrastructure. In Germany, since 2011, Luftverkehrsteuer has been operating: passengers pay from 12.73 to 58.06 euros depending on the flight distance (according to Deutsche Welle). All these measures, according to international experts, are designed not only to replenish budgets, but also to stimulate the transition to more environmentally friendly technologies and reduce the number of unnecessary flights.

Israel has chosen a model of taxation by aircraft weight and route range, which, according to the developers, provides ease of administration and predictability for airlines, regardless of the actual load of the flight. This approach differs from the European models, where the tax is most often calculated by the number of passengers, but, as emphasized in Rashut al-mas, it avoids difficulties in accounting and collecting payments.

Analytics: The introduction of the new tax is likely to lead to a moderate increase in airfare prices and may cause a short-term decrease in demand, especially for budget destinations. In the long term, however, the measure could contribute to the development of more sustainable technologies and encourage airlines to optimise routes and fleets. International experience shows that such taxes are becoming the standard for developed countries, and Israel, following this trend, seeks to balance economic interests with the need to protect the environment. In the coming months, the initiative is expected to be actively discussed in the Knesset and among market participants, as well as possible adjustments to rates and collection mechanisms, depending on the reaction of the industry and the public.

Summary table: Tax rates on departing flights from Israel

Flight category Approximate tax (ILS) Approximate tax amount (USD/EUR) *

Internal (up to 50 t) 12 ~3

Medium range (Europe) 58 ~15

Long-haul 274 ~70

*The rate of conversion is indicative, for comparison with European taxes.

Source: press release Rashut a-mas (08.11.2026), BBC, Deutsche Welle, Le Monde.

Data on foreign taxes gave the policy of countries.