Dim Amor

Each year, millions of residents in Israel pay arnona (municipal property tax) to local authorities. This is a mandatory tax that virtually every property holder must bear – whether an owner or a tenant. Yet, despite being one of the most consistent and burdensome household expenses, a significant portion of the public is unaware of the breadth of legal entitlements to substantial discounts, sometimes amounting to tens and, in certain cases, even hundreds of percent of the accumulated annual charge, depending on the property holder’s personal, economic, and social circumstances.

Arnona is an annual tax imposed on the holder of a property located within the jurisdiction of a local authority, intended to fund the authority’s ongoing operations: education, welfare, sanitation, infrastructure maintenance, community services, and municipal security. Exclusive responsibility for collecting arnona and administering related discounts rests with the local authority itself. The Ministry of the Interior is not responsible for collecting arnona; its role is limited to regulatory oversight, including exceptional approval of rate increases by the Minister of the Interior and the Minister of Finance as part of amendments to the local authority’s taxation order.

Arnona is assessed annually for the tax period from January 1 through December 31 of the relevant tax year. Arnona rates are set each year in the local authority’s arnona order, following approval by the municipal council, and vary from one authority to another. However, regulations enacted under the State Economy Arrangements Regulations establish minimum and maximum rates that local authorities are not permitted to exceed.

Arnona is levied on properties within the local authority’s jurisdiction as defined in Section 269 of the Municipalities Ordinance: buildings, agricultural land, and occupied land. It should be emphasized that arnona is not imposed on land designated for building, except in the areas of Judea and Samaria. In practice, the charge is calculated by multiplying the property’s area (in square meters) by the applicable rate, according to the property type, its use, and its location.

Alongside the assessment mechanism, Israeli law provides for a broad system of arnona discounts intended for various populations. In practice, dozens of resident categories are eligible for discounts, sometimes at significant rates, yet eligibility is not granted automatically. The responsibility to verify eligibility and submit an application lies with the property holder. Submitting an application, whether through a designated form or a written request to the local authority, involves no fee, but may yield savings of thousands of shekels per year.

Eligible groups include employees earning below the minimum wage, minimum-wage earners raising children, students, large households, new immigrants, senior citizens, and persons with disabilities, even where the disability rating is below 100 percent. In addition, there are dedicated discounts for other specific populations, in accordance with criteria set by law and local arnona orders.

Discounts for senior citizens constitute one of the central categories. A senior citizen receiving an allowance from the National Insurance Institute may be eligible for a discount, and in certain cases this also applies to a senior who receives, in addition to the old-age pension, income support benefits or an old-age pension for a person with a disability. There is also an option for a senior discount based on an income test, as well as discounts for recipients of long-term care benefits.

Arnona discounts for low-income residents are generally granted according to income level and the number of household members. However, it should be noted that a local authority is not obligated to grant a discount on the basis of an income test alone; the matter is subject to its discretion, within the bounds of the law. Accordingly, individualized inquiry with the local authority is required regarding eligibility conditions and the documents needed.

Another broad category is disability-related discounts. Eligible persons include those with a work incapacity rating of 75 percent or higher, those with a medical disability rating of 90 percent or higher, parents of a child with a disability, disabled IDF veterans, disabled veterans of the war against the Nazis, victims of hostile acts, victims of Nazi persecution, blind persons, community-based mental-health disabled persons, as well as individuals receiving benefits as Prisoners of Zion or as family members of ,"those executed by the regime".

Alongside these, additional discounts exist, including discounts for single-parent households, new immigrants who are not returning residents, immigrants dependent on assistance, elderly immigrants, conscripts during compulsory military service and up to four months after discharge, parents for whom a soldier was the primary source of income, volunteers in National Service or National–Civic Service, bereaved families, widows of IDF soldiers, Prisoners of Zion, redeemed captives, family members of "those executed by the regime", Holocaust survivors, Righteous Among the Nations and their spouses, as well as active reservists and commanders in active reserve service.

The law also establishes a unique discount for a property holder classified as "needy". This discount is granted under Section 7 of the State Economy Arrangements Regulations (Arnona Discount), 1993. A municipal discounts committee is authorized to grant, under this framework, a discount of up to 70 percent. A "needy" person is a property holder who incurred exceptionally high and unusual expenses due to one-time or ongoing medical treatment for themselves or a family member, or who experienced an event that led to a significant and unforeseen deterioration in their financial situation.

To assess eligibility for the "needy" discount, the gross monthly income of the property holder and all cohabitants, including foster children, is examined. The review relates to the three months of October, November, and December 2024, or alternatively, at the applicant’s choice, the average monthly income for all of 2024. Income is examined from all sources, including wages, benefits, pensions, rental income, scholarships, payments from abroad, interest, and dividends. However, the law expressly excludes certain incomes, including child allowance, old-age pension, survivors’ pension, and disability-child benefits. Rental income is taken into account only insofar as it exceeds the rent the applicant pays for another dwelling.

The discount rate is determined by the municipal discounts committee based on the data presented, up to a ceiling of 70 percent. For submission of the application, supporting documents are required, including an ID card, declarations and proof of income, bank statements, pay slips or tax assessments, and medical or financial documentation, depending on the grounds for the request.

It is important to emphasize that a taxpayer eligible for more than one arnona discount is entitled to only one discount -the highest among them. In a dwelling where two residents eligible for different discounts reside, only one discount applies, the higher of the two.

With respect to contacting the local authority, any resident may direct arnona-related questions and requests to the municipal treasurer, the arnona administrator, or the public inquiries officer in the local authority. Only in exceptional cases, and after receiving the local authority’s response, may one submit a written appeal to the district supervisor at the Ministry of the Interior, attaching the authority’s response.

The picture emerging from the law and procedures is clear: Israel’s arnona discount system is broad and detailed, but its realization depends on resident initiative. Completing a form or submitting a written request involves no cost, yet it may significantly reduce the financial burden on many households. In a reality where the cost of living continues to weigh heavily, checking eligibility for an arnona discount is a simple administrative step that may carry substantial financial implications.