The Knesset has approved the first reading of the 2026 state budget, totaling NIS 662 billion, with a narrow majority. The budget now moves to committee discussions, where its various clauses and the Economic Arrangements bill will face intense debate and possible revisions before the final votes. If the budget is not fully approved by March 31, the Knesset will be dissolved and new elections will be called, raising concerns among economic leaders about the risks of operating on a provisional budget. Key points of contention include significant increases to the defense budget, a higher fiscal deficit target, and controversial reforms such as changes to the dairy sector, bank taxation, and property taxes. Major opposition is expected to many proposed reforms, and some may be dropped as the legislative process continues under a tight deadline.