The Finance Committee of the Knesset approved Israel's 2026 state budget on Monday, clearing the way for its final second and third readings later this week. Lawmakers debated the bill late into the night ahead of the vote. If the budget does not pass all required readings by the legal deadline at the end of March, the Knesset will automatically dissolve and new elections will be triggered.

The proposed budget sets an expenditure cap of about 699 billion New Israeli Shekels, with total authorized government spending reaching roughly 850.59 billion New Israeli Shekels for the 2026 fiscal year. Defense spending will total about 142 billion New Israeli Shekels, reflecting an increase of more than 30 billion New Israeli Shekels due to ongoing war costs. Significant allocations were also designated for education, health, and national insurance.

To finance war-related expenses, the government imposed a three percent across-the-board cut on all ministries and increased defense funding by approximately 32 billion New Israeli Shekels. The plan also includes nearly 6 billion New Israeli Shekels in coalition funds, with allocations for ultra Orthodox institutions and settlements in Judea and Samaria. Opposition lawmakers said they blocked an attempt to divert an additional 5.8 billion New Israeli Shekels without proper legal oversight.

The finance minister welcomed the committee's approval, describing the budget as responsible and supportive of both wartime needs and economic stability, highlighting tax reductions and banking reforms. Political tensions had previously threatened the budget's passage, but coalition agreements ultimately allowed it to advance to its final votes.