Knesset passes record 2026 budget, avoids early elections & allocates billions to defense and ultra-Orthodox sectors

The Israeli Knesset passed the 2026 state budget in a late-night voting session along coalition-opposition lines (62-55), adding billions of shekels to defense spending while allocating billions more to ultra-Orthodox (Haredi) institutions.

The final vote to approve the budget early on Monday morning averted the threat of early elections, which would have been triggered if the budget had not passed by Tuesday’s deadline. Instead, the coalition will remain in power until the next scheduled elections in October 2026.

The NIS 850.6-billion budget ($271 billion), the largest in Israel’s history, secures NIS 143 billion (about $45 billion) in increased defense spending, caused by the extraordinary expenses from the Oct. 7 Gaza War and the ongoing war with Iran. 

After the Defense Ministry, the largest allocations in the new budget go to the Ministry of Education, which will receive over NIS 97 billion ($30.9 billion) for primary and secondary institutions, along with about NIS 14.9 billion ($4.7 billion) for higher education; the National Insurance Institute, which will receive around NIS 64 billion ($20.3 billion); and the Ministry of Health, which will receive around NIS 63 billion ($20 billion). 

The vote early on Monday came after a tense, hours-long session marked by opposition filibusters and repeated air raid sirens due to Iranian ballistic missile fire, which saw lawmakers evacuate the plenum several times. 

The ultra-Orthodox parties had previously threatened to oppose the budget unless the Haredi draft bill was passed, which would have granted legal exemptions from military service for tens of thousands of ultra-Orthodox yeshiva students, but ultimately voted with the coalition to avoid early elections.

During the final stages of the voting, the coalition added last-minute budget reservations totaling an additional NIS 5 billion (about $1.5 billion), most of which was directed toward the interests of the ultra-Orthodox parties.

The late additions led some opposition Members of Knesset to mistakenly vote in favor of the extra funding for ultra-Orthodox educational institutions.

The reservations were intended to release funds previously allocated to Haredi parties but blocked by the Attorney General’s office due to the failure to either implement a draft of Haredi men, as required by law, or pass a new legislation on the issue.

Opposition parties have already vowed to appeal the reservations to the Supreme Court. Opposition leader Yair Lapid later condemned the addition, accusing the coalition of “robbing the citizens of Israel while they are in bomb shelters.” 

“There has never been anything like this in the history of the Knesset,” Lapid posted on 𝕏. “Now, in the plenum, the coalition added at the last moment hundreds of millions of shekels to the Haredi parties beyond the budget framework! We're talking about a pathetic gang of thieves, disconnected from the people, that is robbing the citizens of Israel while they are in shelters.” 

Former Prime Minister Naftali Bennett, considered by some as the most likely potential challenger to Prime Minister Benjamin Netanyahu in the upcoming elections, also accused the coalition of “looting” the public.

“We are at war, and, when cuts are necessary, the people of Israel know how to bear them. But the government is doing something entirely different: looting the public purse,” Bennett said in a video statement. 

Finance Ministry MK Ze'ev Elkin of the New Hope party slammed the opposition for being negligent, writing on 𝕏, "Now in the Knesset voting on the state budget: an event the likes of which I don't remember for many years. The opposition, led by Yair Lapid, is negligent in checking what they are voting on and votes in favor of the ultra-Orthodox reservations about an increase in the budget for yeshivas. About 100 Knesset members supported increasing the yeshiva budget.” 

Ahead of the final vote, Finance Minister Bezalel Smotrich of the Religious Zionism party praised the strength of the Israeli economy despite the ongoing conflict. 

Addressing the opposition, Smotrich said, “You promised the shekel would weaken – yet it is stronger than ever. You predicted the stock market would crash – yet it is only rising. Investments in high-tech are breaking records, unemployment is at a record low, and inflation is declining. Israel’s macroeconomic data is astonishing the world and beating all forecasts.” 

“This budget enables the state to win,” he argued.