Moving to Israel from the US: What to Know

Between the pleasant Mediterranean climate, historical sites, and stunning natural landscapes, Israel is a bucket-list destination for many. Add to that a strong economy, one of the best healthcare systems in the world, and a lower cost of living than many big cities in the US, and it’s no wonder that US expats choose to move there for the long haul.

Of course, moving to Israel is a big decision — so before you buy a one-way ticket, you’ll want to do your research on topics like visas, banking, and taxes. Fortunately, we’ve put information on all of these subjects together in our brief (but thorough!) guide below.

Snapshot of expat life in Israel

Population: 9.36 million

Approximate number of American expats: ~150,000¹

Capital city: Jerusalem

Currency: Israeli shekel

Official language(s): Hebrew

Top cities for expats: Tel Aviv, Jerusalem, Ra’anana

School-year calendar: Early September to late June

Best time to move abroad: Spring or fall

How to move to Israel from the USA: Types of visas

To legally live and work in Israel beyond three months, Americans typically need a visa. Here are a few of the most common options for US expats:²

A/1 Temporary Resident Visa

For those with Jewish heritage (or Jewish spouses).

A/2 Student Visa

For those who will be studying in an Israeli educational institution.

A/4 Visa for Spouses and Children

For the spouses and children of visa holders.

B/1 Work Visa

For those who have received a job offer from an employer located in Israel.

B/5 Investor Visa

For investors and owners of new or existing Israeli businesses that will provide jobs for Israelis.³

American-Israeli dual nationality consideration: Are you eligible?

There are several common ways to obtain Israeli citizenship without having to forfeit your US citizenship, resulting in American-Israeli dual nationality:⁴

• If one (or more) of your parents is or was an Israeli citizen
• If you have Jewish heritage and move to Israel under the Law of Return
• If you marry an Israeli citizen

Planning for a long-term move as an American moving to Israel

If you’re considering moving to Israel on a long-term basis, make sure to consider the following:

• Documents: Bring originals and copies of important documents like your passport, visa, and any other documents you might need
• Moving expenses: Make sure you have enough saved for things like plane tickets, visa fees, a security deposit, etc.
• Belongings: Consult a packing list⁵ to help you decide what to bring with you. Sort through your remaining belongings to decide what should be sold, donated, shipped, or stored
• Pets: If you plan to bring a pet with you, look into the process and requirements⁶ for doing so as well as pet shipping or transportation options
• Cost of living: Research some of the common monthly expenses for the area you’ll be moving to, such as rent, utilities, groceries, etc.
• Healthcare: Look up your healthcare options in Israel⁷ and what you can anticipate as far as expenses. It’s also a good idea to attend a doctor’s appointment before you leave the US to get any vaccines or prescriptions you might need.
• Tie up loose ends in the US: Wrap up tasks like moving out of/renting/selling your current home, canceling subscriptions and services you won’t be using anymore, setting up a mail forwarding address, etc.
• Research & outreach: Do some additional investigating online on topics like safety, transportation, and socializing. To go the extra mile, get advice from people currently living there — Facebook groups and subreddits are good places to find them

How to find accommodation in Israel

Many people who move to a new country choose to find temporary housing, as it gives them the time they need to find the right long-term fit. There are lots of different options for finding temporary stays in Israel — some options include:

• Hotel aggregators, like TripAdvisor, Booking.com, & Kayak
• Hostelworld
• Couchsurfing
• Short-stay marketplaces, like Airbnb, Vrbo, & Sonder
• Reaching out to your personal network

How to open a bank account in Israel

If you’re going to be in Israel on a long-term basis, you’ll almost certainly want to open a bank account there. In order to do that, however, you’ll need to:⁸

• Gather the required documents:
  • Passport
  • Teudat zehut, or officially Israeli ID
  • Teudat oleh, or immigration certificate (only for people immigrating under the Law of Return)
  • Social security number
  • Note of Future Bank Account
  • Cash or check to deposit
  • Non-residents may also need to provide a secondary form of ID, bank statements, etc.
• Go to the bank: Most banks will require you to set up an account in person, although they typically don’t require appointments. Here, you’ll fill out application forms, show your required documents, and make your first deposit.

Best Israel banks for expats

There are a number of different banks in Israel, but some of the best options for US expats tend to be:

• Bank Hapoalim
• Bank Leumi
• Discount Bank
• Mizrahi Tefahot

Considerations when transferring large sums of money between the US and Israel

Whether you’re topping up living funds or purchasing a property, transferring money is essential when moving overseas. Using a regulated money transfer provider can be a great option for making payments. 

Money transfer providers offer personalized support and can keep you updated with currency movements. In today’s market, even a small movement in the exchange rate can make a big difference to the amount you’re receiving. Specialist providers such as Clear Currency offer services that are not available through your bank and can be more readily tailored to your needs. They offer:

• Excellent exchange rates with the ability to transfer over the phone or online.
• Access to a dedicated currency specialist who can offer guidance, book currency transactions, and make sure your money arrives hassle-free.
• Help to mitigate the impact of currency risk by securing favorable exchange rates.
• Fully regulated and client-segregated accounts, meaning that your funds are completely safe and secure.

Many expats are moving to online banking

Rather than opening a physical bank account, many US expats are turning to online banks like Starling Bank, Monzo, and Monese. Money transfer services like Wise, meanwhile, make it easy to transfer cash from your US to online bank accounts, get paid, and send payments to others.

Navigating tax obligations as a US expat in Israel

So how exactly will your tax obligations change when moving to Israel? Here’s a quick breakdown:

US tax return

All Americans who meet the minimum income reporting threshold must file a US tax return, regardless of where they live. While tax bills are still due on April 15, Americans abroad do get an automatic filing extension to June 15, which can be pushed back to October 15 upon request.

Additional US reporting requirements

You may need to file additional reports after moving abroad, such as the:

• Foreign Bank Account Report: Required for anyone with more than $10,000 combined in foreign accounts.
• Form 8938: Required for anyone with over $200,000 in foreign assets on the last day of the tax year, or more than $300,000 at any point in the tax year.

Additional US tax breaks

Fortunately, moving abroad also opens up new tax breaks to you, such as the:

• Foreign Tax Credit (FTC): Gives Americans who have paid income taxes to a foreign government dollar-for-dollar credits they can apply to their US tax bill.
• Foreign Earned Income Exclusion (FEIE): Allows Americans to exclude a portion of their foreign-earned income ($120,000 as of 2023) from taxation, provided that they pass either the Physical Presence Test or Bona Fide Residence Test.
  • Foreign Housing Deduction/Exclusion: Allows those who have qualified for the FEIE to write off qualified housing expenses like rent, utilities, repairs, etc.

Israeli tax obligations

Israel defines tax residents as those whose “center of life” is in Israel.⁹ The definition for this isn’t very cut and dry, but is commonly interpreted to include those who meet at least one of the following criteria:

• Spends more than 183 days per year in Israel
• Maintains a residence in Israel
• Has strong ties (e.g. social, familial, financial) to Israel

Tax residents are typically subject to taxation on their global income — but new Israeli residents are exempted from Israeli taxes and reporting requirements on all non-Israeli sourced income for 10 years. Often, they don’t even have to file an Israeli tax return initially.¹⁰

Anyone who does have to file an Israeli tax return, however, must typically do so by April 30th — although the government sometimes grants extensions.¹¹

Common tax challenges for US expats in Israel

As you can probably imagine, being subject to taxation by two different governments can get complicated. Some issues that US expats in Israel may run into include:

• Limited tax treaty benefits: The US/Israeli tax treaty is designed to prevent double taxation in theory, but the savings clause states that the IRS can essentially choose to disregard it
• Complex new forms: If moving to Israel has triggered additional reporting requirements for you, or if you want to take advantage of the tax breaks available to US expats, you’ll need to file additional forms (which can be tricky to decipher)
• Penalties & fines: If you forget to include certain information or make a mistake on your taxes, the fines and penalties can be steep
• Confusing foreign tax obligations: Israeli taxes can be complex, and individual tax and reporting obligations vary significantly depending on one’s circumstances

Because of this, many US expats in Israel choose to work with tax professionals.

References

1. Number of Americans in Israel
2. Israel Visa Application and Requirements
3. B/5 Investor Visa for USA Citizens
4. How to Become an Israeli Citizen
5. The Ultimate Packing List for Israel
6. Pet Travel from the US to Israel
7. Guide to Health Insurance and Healthcare System in Israel
8. Opening a Bank Account in Israel
9. Israel Individual Tax Summaries
10. Who Must File an Israeli 2022 Tax Return?
11. Israel – Individual – Tax administration