2024 Report: Poverty and Inequality Rise in Israel Despite Wartime Spending - Child Poverty Worsens

Finance Minister Bezalel Smotrich said this week that the government’s economic policy had produced “great” results. Still, new data published by the National Insurance Institute (NII) paints a more troubling picture. Poverty in Israel rose in 2024, particularly among children, and preliminary estimates indicate a further deterioration in 2025. Inequality also increased for the first time in four years.

The findings are presented in the NII’s annual poverty report, released on Friday. The report presents finalized poverty data for 2024 based on income records held by the institute, alongside initial estimates for 2025 derived from partial income data for employees through June and for the self-employed through September.

Poverty Rates Edge Up in 2024

Poverty in Israel is measured relative to income: individuals earning less than half the median per-capita monthly income are classified as poor. Due to rising wages, the poverty line increased by 3.7% in 2024, reaching NIS 3,547 per month.

The report distinguishes between poverty based on economic (gross) income and poverty after government intervention, which accounts for taxes and state transfers such as allowances and benefits.

In 2024, real wages rose sharply amid inflationary pressures and labor shortages, while government transfers expanded significantly due to the war. These included grants to evacuees, compensation for victims of hostilities, reserve-duty payments, unemployment benefits, and support for families of abductees.

As a result, poverty based on economic income worsened, but net poverty — after government intervention — remained largely unchanged. The poverty rate based on economic income rose to 31.5% in 2024, up 0.5 percentage points from 2023, while the share of poor families increased to 34.5%. After government transfers, the poverty rate among individuals stood at 20.7%, similar to the previous year, and the rate among families declined slightly to 20%.

Child Poverty Continues to Climb

A key concern highlighted in the report is child poverty. In 2024, the poverty rate among children rose to 28%, compared with 27.6% in 2023, even after accounting for government support. Families with many children, which tend to have lower incomes, remain particularly vulnerable.

Further Deterioration in 2025

According to the NII’s preliminary estimates, poverty worsened further in 2025. During that year, the government introduced measures that reduced household income and scaled back support, including freezing tax brackets (effectively raising taxes in real terms), increasing National Insurance contributions, and freezing pensions and other benefits.

As a result, net poverty among individuals rose to 21%, reversing gains made during the COVID-19 period and the early years of the war. Poverty levels have effectively returned to those seen in 2019. Net child poverty climbed further to 28.8% in 2025, while indicators measuring the depth of poverty also showed a sharp deterioration.

Israel Near Bottom of OECD Rankings

International comparisons underscore the severity of the situation. According to the NII, Israel ranks near the bottom among OECD countries in net poverty rates, with only Costa Rica recording a higher rate. Even before government transfers, Israel ranks ninth in the OECD in terms of poverty based on economic income.

Persistent Gaps in Arab and Haredi Communities

Poverty remains particularly high in Arab and Haredi communities. In 2024, more than half of the Haredi population was poor based on economic income. Government transfers reduced the rate to 32.8%, despite cuts to benefits following the suspension of funding for yeshiva students who do not serve in the military.

In Arab society, poverty based on economic income reached 48.8%. Government transfers reduced the rate to 37.6%, leaving poverty in Arab society higher than in the Haredi population. The report notes that government benefits have a more limited impact on reducing poverty in Arab communities.

Inequality Rises as High Incomes Pull Ahead

Income inequality also increased in 2025, as measured by the Gini index. After a slight decline in 2024, inequality based on economic income rose to 0.5078 in 2025, up from 0.4958 the previous year. The increase reflects faster income growth among higher earners, particularly in sectors such as high-tech.

Even after government intervention, inequality continued to rise, with the Gini index reaching 0.3749, compared with 0.3692 in 2024.

Budget Offers Limited Relief

The 2026 state budget submitted for approval includes no major initiatives aimed at reducing poverty or inequality. The primary measure affecting income distribution is an expansion of tax brackets for earners making more than NIS 16,000 per month — a step expected to benefit the middle class, but with little impact on poverty levels.