In a win for Prime Minister Benjamin Netanyahu, lawmakers on Wednesday evening voted 62-55 in favor of the first reading of the 2026 state budget, following a two-day delay caused by last-minute Haredi demands related to the coalition’s ultra-Orthodox draft exemption bill. The legislation must pass two further readings to become law.

Under the state budget bill, expenditures for fiscal year 2026 will be around NIS 811.74 billion ($262 billion), consisting of a standard budget of some NIS 580.75 billion ($187 billion) and a development and capital account budget of approximately NIS 230.99 billion ($74.5 billion).

The budget includes NIS 112 billion ($34 billion) for defense, NIS 413 million ($133 million) for the Interior Ministry, NIS 3.34 billion ($1 billion) for the Foreign Ministry, NIS 63 billion ($20.3 billion) for healthcare, and NIS 887 million ($286 million) for religious services.

Among the major reforms featured in the 2026 budget are an opening up of the banking sector, a proposed loosening of tariffs on dairy imports, as well as an NIS 30 ($10) tax on e-cigarettes, marking the first attempt by an Israeli government to regulate the burgeoning market.

While the budget was initially supposed to be placed before the Knesset for its first reading on Monday evening, the vote was delayed after Haredi lawmakers objected to various changes to the military enlistment bill recommended by Knesset Foreign Affairs and Defense Committee legal advisor Miri Frankel Shor, including her call to pass the law “as a temporary provision for a maximum period of five years.”

This delay placed additional pressure on Netanyahu’s coalition, which had to begin voting on the budget this week in order to meet a legally mandated March 31 deadline. Under Israeli law, if the government fails to pass the budget by the end of March, the Knesset will automatically dissolve, triggering early elections three months later. Elections are currently slated to be held by late October.

Following feverish last-minute negotiations between Knesset Foreign Affairs and Defense Committee chairman Boaz Bismuth and representatives of the Haredi parties on........

© The Times of Israel