The Israeli government approved the 2026 state budget on Friday. The approved budget is 662 billion shekels, 40 billion more than the original proposed budget.
Overnight, an agreement was reached regarding the defense budget, which will be 112 billion shekels. The sum reached by teams from the Finance and Defense Ministries, approved by Finance Minister Bezalel Smotrich and Defense Minister Israel Katz, is significantly lower than the defense establishment's original demand of 140 billion shekels.
The Finance Ministry addressed the defense budget, saying that “the approved framework makes it possible to avoid imposing tax increases on Israeli citizens in the coming year, and even to introduce tax relief as part of the state budget.”
Finance Minister Bezalel Smotrich stated, “I commend the defense establishment on the agreements. We are allocating an enormous budget for the military’s buildup this year, but one that also allows us to return the State of Israel to a path of growth and to ease the burden on citizens.”
Likewise, agreements were reached between the Finance Ministry and the Ministries of Education, Housing, Welfare, Tourism, Economy, Negev and Galilee, Religious Affairs, Social Equality, and Regional Coordination.
The 2026 education budget will be approximately 94 billion shekels, 4 billion shekels more than that in 2025. The higher learning budget will not be cut.
The National Security Ministry received an extra 4.5 billion shekels to its budget. Ben-Gvir’s office additionally reported that the National Security Ministry will receive 3,000 new positions for the police, the Prison Service, and other internal security bodies, along with an estimated 1.5 billion shekel increase in salary costs, which will be provided by the Finance Ministry.
The government also approved the dairy reform, which would open the market to imports to increase production and lower costs. The move was opposed by the Ministry of Agriculture and dairy farmers. The reform remained in the Arrangements Law and was approved today in a vote, with Minister Dichter opposing it, and Ben-Gvir and Eliyahu abstaining.