Knesset Approves the War-Era Compensation Plan for Businesses and Workers

After weeks of deliberation and seven discussions in the Finance Committee, the Knesset has officially approved the compensation plan proposed by Finance Minister Bezalel Smotrich. The plan provides financial relief to businesses and workers affected by the ongoing war and recent military operations, including the broader conflict with Iran.

Who Is Eligible for Business Grants?

The compensation applies to businesses with an annual turnover between NIS 12,000 and NIS 400 million in 2022 that suffered a significant drop in revenue during May and June 2025.

• Monthly VAT filers: Must show a 25%+ drop in turnover.

• Bimonthly VAT filers: Require only a 12.5%+ drop.

New businesses (launched after January 1, 2023) can compare their income drop to either their monthly average since founding or from January 1, 2025, until their last pre-war VAT filing.

Different Grants Based on Business Size

Small Businesses (Turnover up to NIS 300,000):

Grants range from:

• NIS 1,833 for businesses earning up to NIS 50,000 (with up to 40% income loss)

• Up to NIS 14,691 for businesses earning more than NIS 250,000 (with over 80% income loss)

VAT-Exempt Small Businesses:

Fixed grants based on revenue:

• NIS 1,833 (up to NIS 50,000 turnover)

• NIS 3,300 (up to NIS 90,000)

• NIS 4,400 (up to NIS 120,000)

Larger Businesses (Turnover above NIS 300,000):

Grants are calculated based on salary expenses, non-salary expenses, and the rate of revenue loss.

• For a 25% loss, a business spending NIS 100,000 on salaries and another NIS 100,000 on other expenses would receive:

  • NIS 7,000 for non-salary costs (7%)

  • NIS 18,750 for salary costs (75% of injury rate × salary expense)

  • Total Grant: NIS 25,750

Grants increase as the rate of injury rises—up to 22% on non-salary expenses.

When and How to Apply

The Tax Authority will open the claims system "in the coming days." Businesses will have 90 days to submit their claims.

• Most claims will be processed within a few days

• Claims needing manual review may take up to 8 months

• In these cases, an advance of 60% of the grant will be paid within 3 weeks

Compensation for Businesses Affected by Iran War

Businesses closed due to direct war damage may be entitled to extra compensation:

• If closed through the end of July → Eligible for July–August compensation

• If closed beyond August → Eligible for September–December, provided activity stopped for at least 15 days during each month

Rental Income Loss Compensation for Landlords

Residential and commercial landlords can receive compensation if:

• The property was rented at the time of damage or within 3 months prior

• It was declared uninhabitable for at least 1 month

• No rent was collected during the rehab period

Compensation will equal the last rent paid for the duration of rehabilitation as determined by the Property Tax Authority.

Unpaid Leave and Unemployment Benefits

Employees placed on unpaid leave during Operation With a Dog may now be eligible for unemployment benefits if:

• They missed at least 10 of the 12 days of the operation

• They worked at least 6 out of the previous 18 months

Key changes include:

• No need to use vacation days before unpaid leave

• No waiting period before receiving benefits

Special conditions for vulnerable populations:

• Discharged soldiers, people with disabilities, citizens over 67, and evacuees from the northern border only need to have worked 3 months in the last 18 months.

Unemployment Benefit Calculation and Timeline

• Workers will receive 75% of their average salary, based on their top 3 months of income in the last 6 months

• The maximum daily rate: NIS 134/day

The National Insurance Institute says the system to process these claims will be ready in about one month.

This comprehensive financial relief plan aims to support businesses of all sizes, landlords, and workers impacted by the war and recent military escalations. While implementation systems are still being finalized, the government emphasizes that support will be broad, fast-tracked, and retroactive where applicable.