(haipo) – The Tax Authority announced that, as of January 1, 2026, donors who wish to exercise their entitlement to a tax credit for donations through tax reconciliation during the tax year will be able to do so only for donations reported in the online “Israel Donations” system. Tax reconciliations based on manual receipts or donations not reported in the system will no longer be issued.
Preventing double crediting and tightening supervision
The decision was made following the establishment of the “Israel Donations” system, which allows nonprofits to report donations online and transfer the donation details directly to the donor’s personal area on the Tax Authority website. The purpose of the change is to prevent a situation of double tax credit, in which manual donations receive a credit in tax coordination and are then updated retrospectively in the system.
What happens if the donation has not yet been reported?
Donors who donated to a recognized nonprofit for the benefit, but whose donation has not yet been updated in the "Israel Donations" system, will be able to receive a tax credit only if the nonprofit updates the donations in the system before the end of the tax year.
If the donations are not updated by the end of the year, the credit can be obtained by submitting a tax refund application or as part of an annual report at the beginning of the following year, along with a scan of the receipts that were not reported in the system.
Benefits of the new system for donors
For donations reported in the online system, it will be possible to make tax adjustments several times during the year without limit, and also to claim contributions made by a spouse, as long as they were reported in the system.
The system eliminates the need to collect manual receipts, as donation confirmations automatically appear in the donor's personal area and are available for viewing when completing the online tax reconciliation.
Reporting obligation for non-profit organizations – starting in 2026
The “Israel Donations” system was also developed by the Tax Authority for the purpose of more efficient and closer supervision of donation funds received by non-profit organizations that hold a permit, according to Section 46 of the Income Tax Ordinance. Starting January 1, 2026, all non-profit organizations that hold this permit will be required to report donations and donation cancellations in the system.
Tax credit directly on the paycheck
As part of the move, an option was also developed to receive the tax credit for direct donations, via pay stub. To this end, the employer must ensure that its payroll software is interfaced with the “Israel Donations” system, and the employee is required to give permission, in the personal area of the Tax Authority website, to transfer the amount of the donations for the purpose of calculating the credit.
The employer will receive information only on the cumulative amount of donations, without detailing or identifying the organizations to which the employee donated.