Low-income Israeli reservists who served extended periods in the Israel Defense Forces (IDF) are losing municipal tax (arnona) discounts after protections tied to their wartime service expired at the end of 2025, according to a petition filed with the High Court of Justice on Tuesday by Jerusalem’s Hitorerut movement. The group is calling for the restoration of these concessions, arguing that the government neglected to renew a temporary arrangement despite prior warnings and commitments.
The dispute centers on income-based arnona discounts, which depend on declared household income and size. Under current regulations, ordinary reserve compensation counts as income when determining eligibility for municipal tax relief. For students and low-wage workers, the minimum payments received during military reserve service can exceed their usual earnings, artificially inflating their reported income and pushing them above the threshold for discounts.
Previously, a temporary regulation allowed municipalities—including Jerusalem—to exclude reserve payments when calculating income for arnona discounts for the years 2024 and 2025. However, this provision expired at the close of 2025, leaving municipalities without authority to continue excluding these payments in 2026. As a result, some reservists who benefited from steep discounts last year are now facing full municipal tax bills.
One example highlighted in the petition involves a medical student at the Hebrew University of Jerusalem who served 425 reserve days from the conflict’s outbreak until August 6, 2026, including 118 days in 2025. He received an 80% arnona discount in 2025 but was charged the full NIS 5,705.45 bill for 2026. Despite monthly wages of just NIS 788 in October 2025 from limited part-time work, his income was recorded as roughly NIS 73,977 for the year due to reserve payments and supplements, surpassing the NIS 5,857 monthly income ceiling for a single-person household to qualify for a discount in 2026.
Similar cases include a married reservist and his wife whose discount dropped from 80% in 2025 to 20% in 2026, and another medical student with monthly earnings between NIS 2,600 and NIS 3,000 who lost his 80% discount and was billed nearly NIS 5,878. Hitorerut contends that this approach results in unequal treatment, penalizing reservists who receive military pay while allowing non-serving individuals with similar wages to retain their benefits.
Jerusalem Deputy Mayor and Hitorerut chairman Adir Schwartz criticized the situation, stating that reservists "should not have to fight twice – once at the front and once against the bureaucracy."
Hitorerut first petitioned on the issue in June 2024, which prompted the temporary regulation published in November that year. The High Court subsequently closed that case in January 2025, granting costs to the movement but stopping short of ruling on the petition’s merits. Although the movement sought an extension in September 2025 and reportedly received approval from the acting Interior Minister’s Office, no new regulation was enacted. Further requests for government intervention in August and September 2026 yielded only acknowledgments without substantive action.
A policy change by the Interior Ministry now requires income eligibility assessments to use the average income over 12 months rather than relying on the final three months of the previous year—a modification that diminishes the benefit for reservists whose service payments fall outside that timeframe.
Hitorerut is seeking a reinstatement of the exclusion of reserve income for 2026–2027, applied retroactively from January 1, 2026, or an alternative measure to protect affected reservists. The petition also requests recalculations of eligibility and refunding of any overpayments. With Jerusalem’s October 31 deadline for arnona discount applications imminent, the movement is pressing for an extension to prevent reservists from losing the chance to apply while the matter remains unresolved. It further urges the government to consider establishing a standing policy as emergency reserve call-ups continue.