Everything you need to know about Israel’s municipal property tax, registration process, and special discounts for new immigrants
What is Arnona?
Arnona is Israel’s municipal property tax charged by all cities and towns to finance their activities and services. It is calculated based on various parameters, including the property’s size, location, socio-economic status of the neighborhood, and purpose of the building.
Key Characteristics of Arnona
Different from Global Standards: Unlike property taxes in the US which are based on property value, Israel’s Arnona is calculated based on the size of the property multiplied by its location rate, meaning a larger property might incur higher costs regardless of its market value.
Tenant Responsibility: The tax is imposed on residents of the municipality, so renters are typically responsible for paying the tax on rented property - not the owner. This applies to rental agreements of one year or longer.
Zone-Based Pricing: Arnona is calculated based on the area (m²) of your property, with municipalities typically having different zones (A-D) that set varying rates depending on the neighborhood’s socio-economic status.
How Arnona is Calculated
Factors Affecting Your Bill
The local municipality considers various factors to determine the amount, including:
- Location: Wealthier neighborhoods typically have higher rates
- Property Size: Charged per square meter
- Proximity to Services: Properties near town centers, business parks, or transport hubs cost more
- Building Age: Newer buildings are taxed higher than older ones
- Property Type: Commercial properties are taxed higher than residential
- Additional Features: Parking spaces, bomb shelters, and balconies are included in calculations
Sample Rates
The rates can vary dramatically between municipalities. For example, in Modi’in, standard apartments pay ₪48 per square meter per year, while penthouse apartments pay ₪51.36 per square meter. In Bet Shemesh, old neighborhoods pay ₪41.26 per square meter regardless of property type.
How to Set Up Arnona
Registration Process
When someone moves, they must register their residence under their name with the Iriyah (municipality). Generally, the municipality will register the apartment in one’s name only from the date the request is received.
Required Documents
For Property Owners:
Submit a copy of the purchase contract and photo ID
For Renters:
Submit the rental contract and a joint statement signed by both renter and landlord confirming the previous tenant has vacated, listing the signee as the new renter. Include the property’s address, relevant dates, and teudat zehut/passport numbers of all parties
How to Register
Registration can be done by filling out a form online, or by calling the Municipality’s Arnona department. You should have the following documents ready: Teudat Zehut or passport + visa, apartment contract, relevant forms if applying for a discount, and the Arnona bill.
Important: You cannot apply for an Arnona discount unless the apartment is registered under your name. Register as the resident (machzik) as soon as possible, even if you plan to apply for a discount at a later date.
Payment Methods and Timing
When Bills Are Due
The Municipality sends out Arnona bills every January, informing you of your liability for the coming year. The Arnona bill must be paid by January 30th, and late fees will be applied for each month overdue.
Payment Options
Upfront Payment: Pay the entire bill at the beginning of the year in cash, credit, or check at bank branches or using online payment systems
Monthly Installments (Hora’at Keva): Monthly automatic withdrawals via bank account. Submit the authorization form signed by your bank to the Arnona office or on the municipality’s website. This option offers a 0.75% discount
Credit Card Installments: Available but no discount is offered, and interest may apply from the credit card company
Post-Dated Checks: Up to 12 checks dated through December. A detailed receipt will be sent each time a check is deposited, but this option incurs interest
Online Payment: Use an Israeli credit card on the municipality website
Phone Payment: Available through automated systems or customer service representatives
Olim (New Immigrant) Discounts
Discount Details
Olim are customarily granted a discount of 70-90% on Arnona payments for up to 100 square meters during one 12-month period within the first two years of Aliyah.
New immigrants can use a generous 90% discount on Arnona payments for properties up to 100 square meters in size, for a period of 12 months within the first two years of Aliyah. If the rented or owned property is over 100 sqm, the discount will be prorated.
Key Requirements for Olim Discount
Eligibility: The Oleh needs to present a rental contract of at least 12 months, or proof of ownership. Olim and Ezrachim Olim are both eligible for this benefit
Timing: Olim must use the discount during one of the first two years after Aliyah, and only for one 12-month period. The benefit is not retroactive and must be completed by the end of the second year after Aliyah
Documentation: The immigrant must have a teudat oleh and their name must appear on the Arnona bill
Area Limitation: The discount applies to the first 100 square meters. If the property is larger than 100 square meters, the rest will be paid at the non-discounted rate
Example Savings
If an Oleh Chadash lives in a property that is 100 square meters and gets the full 90% discount, they may only pay 10% of the regular rate. For a 150 square meter property, they get the full discount on the first 100 square meters and pay the regular rate for the remaining 50 square meters.
Application Process
Timing: Generally, discounts may be applied for starting mid-January. The deadline to apply for a discount on the year’s bill is August 31. If one entered the apartment after that date, discount applications may be submitted until December 31
How to Apply: Apply online, though applications can be submitted in person. The municipality highly recommends submitting applications online for smoother processing
Important: Olim who are entitled to this benefit are encouraged to activate it sooner rather than later as the benefit is not retroactive
Additional Discounts Available
Other Eligible Groups
Additional discounts are granted according to various social criteria, such as if the residents are retirees, single parents, or in a difficult financial situation. Eligible for rebates, exemptions or refunds include students, the elderly, the disabled, single mothers, soldiers, Holocaust survivors, and others.
Senior Citizens
A senior citizen can receive up to 30% off on their Arnona tax for the first 100 square meters. However, the discount only applies for Israeli workers whose income does not exceed the average wage.
Income-Based Discounts
Discounts for 2025 are based on one’s income in 2024, and many cities offer further discounts based on income levels.
Important Tips and Warnings
Payment Timing
Pay the Arnona bill before the due date, even if you have not yet applied for or received a discount. If approved, you will receive a refund to your Israeli bank account or a credit towards the next bill for any overpaid amount
Registration Timing
You must file the residence under your name as soon as you move in. If you pay the bill before registering the residence in your name, any refund due will be issued to whoever was registered as the resident at the time of payment
Consequences of Non-Payment
Failure to pay on time can result in interest, legal fees and consequences such as frozen bank accounts. Additionally, discounts can be revoked if dues are not paid by year-end
Shared Apartments
If you are sharing an apartment, the benefit will be given proportionally for your part of the apartment
Marriage Considerations
If you are married to a veteran Oleh, check your eligibility with your local municipality
Municipal Variations
Important Note: The rate of the discount is determined by the local municipality and may vary from city to city, though customarily the discount is 50-90% for up to 100m²
Each municipality has its own specific procedures, rates, and requirements. A city’s municipal website will list discount availabilities for Olim as well as further discounts available
Summary
Arnona is a mandatory municipal tax that significantly affects your housing costs in Israel. For new immigrants, the substantial discounts available can provide meaningful financial relief during the challenging first years of absorption. The key to maximizing these benefits is:
- Register immediately when you move into a property
- Apply for discounts promptly within the eligibility timeframes
- Keep all documentation organized and accessible
- Pay on time to avoid penalties and maintain discount eligibility
- Check with your specific municipality for local variations in rates and procedures
Understanding and properly managing your Arnona obligations will help you navigate one of the practical aspects of establishing your new life in Israel while taking advantage of the significant financial benefits available to new immigrants.