The cabinet has approved the 2026 state budget after intense negotiations, particularly over defense spending, with a compromise reached between the finance and defense ministers. The budget, totaling approximately NIS 662 billion, now heads to the Knesset for further readings and committee discussions, with a deadline set for the end of March 2026 to avoid early elections. Key elements include a defense budget set at NIS 112 billion, new taxes on e-cigarettes, and reforms such as easing tariffs on dairy imports and expanding value-added tax exemptions on personal imports. The budget has drawn sharp criticism from opposition leaders, who accuse the government of raising taxes to fund subsidies for the ultra-Orthodox community and failing to address the high cost of living, while supporters highlight efforts to increase competition and lower consumer prices.