Air travel is one of the few sectors whose wider costs to the economy, from emissions to noise and air pollution, are not reflected in Israel’s tax system. That may soon change. Ahead of discussions on the next state budget, the Israel Tax Authority has published a position paper recommending a tax on every aircraft departing Israel, calculated by weight and distance. Passengers could pay about NIS 58 more for a ticket to Europe and NIS 274 for long-haul flights, with expected state revenue of about NIS 1.1 billion a year.
The Israel Tax Authority has published a position paper recommending a new tax on every aircraft departing from Israel. If adopted, it would add approximately NIS 58 to a ticket to Europe and NIS 274 to long-haul destinations. The impact may extend well beyond airlines: businesses with significant travel budgets, importers and exporters relying on air freight, travel and tourism operators, and fuel and energy companies facing new SAF requirements could all be affected.
In preparation for the upcoming discussions regarding Israel’s next state budget, the Israel Tax Authority recently published a position paper on the taxation of outbound flights, prepared by the Authority’s Planning and Economics Division. The position paper examined various alternatives for taxing flights and recommended imposing a tax on every aircraft departing from Israel, based on parameters of weight and distance. This taxation option was chosen due to its operational simplicity and the certainty it provides the airline regarding the amount of tax to be imposed, regardless of the actual number of passengers.
The projected tax amounts would range from approximately NIS 1,300 per flight (for an aircraft weighing up to 50 tons on a domestic flight) to approximately NIS 100,000 per flight (for an aircraft weighing over 300 tons on a long-haul flight).
In practice, the tax will result in an additional cost of approximately NIS 12 per passenger for domestic flights, about NIS 58 per passenger for medium-haul flights (primarily to Europe), and approximately NIS 274 per passenger for long-haul flights (such as those to the U.S. and East Asia). In other words, the tax could account for roughly 4–5% of the ticket price paid by the passenger. The Israel Tax Authority estimates that state revenue from the collection of this potential tax will reach approximately NIS 1.1 billion annually.
The rationale behind imposing the tax is that flights contribute significantly to global warming, as well as to local nuisances (noise and air pollution) that necessitate state investment in appropriate infrastructure and the healthcare system. Unlike the situation in the automotive or industrial sectors, the Israeli tax system currently does not account for the additional costs imposed on the economy by air travel [it should be noted that a new legislative framework unveiled by the Ministry of Energy and Infrastructure in June 2026 will require the integration of sustainable aviation fuels (SAF) at a rate of 2% beginning in 2028, rising gradually to 70% by 2053 – aligning Israel with the Regulation (EU) 2023/2405 (ReFuelEU Aviation) and imposing new compliance and reporting obligations on all carriers operating to and from Israel]. According to the position paper, several other countries (such as the United Kingdom, France and Germany) have recently adopted a similar mechanism for taxing outbound flights, for similar reasons.
The position paper is a recommendation only and has not yet been adopted. If implemented, the tax may affect not only airlines but also businesses with significant travel budgets, importers and exporters relying on air freight (as the tax is levied per aircraft, it may also apply to cargo flights), and travel agencies and tourism operators. The SAF requirements also create new obligations and opportunities for fuel suppliers and energy companies.
