Arnona Explained: Israel's Municipal

Property Tax

Arnona is one of those uniquely Israeli systems that confuses newcomers and even longtime residents. It's a municipal property tax that funds local services, but unlike property taxes in many countries, it's calculated based on property size and type rather than market value. Understanding arnona, how it's calculated, who pays it, and what discounts are available (particularly for new immigrants) is essential for anyone living in Israel.

What is Arnona?

Arnona (ארנונה) is a municipal tax paid to your local city or regional council. The name derives from the Biblical term for tribute or tax. Every property in Israel is subject to arnona, whether residential, commercial, industrial, or vacant land.

The revenue from arnona funds municipal services including street maintenance, garbage collection, public parks, local education services, cultural programming, municipal infrastructure, and general city operations. Different municipalities set different arnona rates based on their budgets and service levels, which is why arnona can vary significantly between cities.

How Arnona is Calculated

Unlike property taxes in the US, UK, or many other countries that are based on property value, Israeli arnona is calculated primarily based on property size measured in square meters.

The Basic Formula

The formula is straightforward: Arnona = Property Size (m²) × Rate per m² × Property Classification

Each municipality sets its own rate per square meter, and this rate varies by property classification (residential, commercial, office space, industrial, etc.). Within residential properties, there may be subcategories with different rates.

Property Classification

Properties are classified into categories that affect the rate:

**Residential (מגורים דירת) **- Standard housing, the most common classification with generally the lowest rates

**Residential - Low Standard (נמוכה רמה - מגורים דירת) **- Older or substandard housing, sometimes with reduced rates

**Commercial (מסחרי) **- Shops, restaurants, and retail businesses, with significantly higher rates than residential

**Office (משרדים) **- Professional offices, also with higher rates

**Industrial (תעשייתי) **- Factories and industrial facilities

**Vacant Land (ריקה קרקע) **- Undeveloped plots

**Mixed Use **- Properties combining residential and commercial space

For most individuals, residential classification is what matters. Commercial properties pay substantially more, sometimes 3-4 times the residential rate.

Property Measurement

Your property's size is measured by the municipality and recorded in official records. This includes the interior living space and typically half of any balconies (mirpesot). In apartment buildings, a proportional share of common areas might also be included in the calculation.

If you believe your property has been mismeasured, you can request a reassessment, though this requires evidence and sometimes professional measurement services.

Payment Structure and Timing

Arnona is billed bi-monthly (every two months) by most municipalities, though payment frequency can vary. You'll receive six bills per year, each covering two months of arnona.

Bi-Monthly Billing

Bills typically arrive a few weeks before they're due. The bill shows the billing period, property size, rate per square meter, any applicable discounts, and the total amount due.

Payment Methods

Most municipalities offer several payment options:

**Horaʼat Keva (Standing Order) **- Automatic bank transfer, the most common method. Many municipalities offer a small discount (typically 2-3%) for paying via standing order.

**Credit Card **- Either one-time payments or automatic monthly charges. Some municipalities allow payment through their website or app.

**Direct Payment **- At the municipality's arnona office, though this requires physically visiting during business hours.

**Bank Transfer **- Manual transfer using the payment details on your bill.

**Post Office **- Some municipalities still allow payment at post offices.

Payment Timing

Bills must be paid by the due date printed on them. Late payments incur penalties (interest charges), typically around 4-5% plus linkage to the CPI. These penalties accumulate quickly, so timely payment is important.

Most people set up standing orders to ensure on-time payment and receive the payment discount.

How Much is Arnona?

Arnona costs vary dramatically by municipality and property size. There's no single national rate.

Municipal Variations

Tel Aviv, as a large city with extensive services, has relatively high arnona rates. A 75 square meter apartment might cost 2,400-2,800 shekels bi-monthly (14,400-16,800 shekels annually).

Jerusalem has somewhat lower rates than Tel Aviv, though rates vary between neighborhoods. The same 75 m² apartment might cost 2,000-2,400 shekels bi-monthly.

Peripheral cities and development towns generally have lower rates. Cities like Beer Sheva, Ashdod, or Netanya often charge less than central area municipalities.

Small regional councils (mo'atzot) serving suburban or rural areas sometimes have much lower rates but may also offer fewer municipal services.

Example Calculations

For a 70 m² apartment in Tel Aviv paying approximately 23 shekels per m² bi-monthly: 70 m² × 23

₪/m² = 1,610 ₪ bi-monthly, or 9,660 ₪ annually

For a 90 m² apartment in a peripheral city paying 16 shekels per m² bi-monthly: 90 m² × 16 ₪/m² = 1,440 ₪ bi-monthly, or 8,640 ₪ annually

These are rough estimates; actual rates vary and change annually based on municipal budgets.

Who Pays Arnona?

The legal obligation to pay arnona falls on whoever holds the property rights, but practical arrangements vary.

Homeowners

Property owners are directly responsible for their arnona. They receive bills from the municipality and must pay directly.

Renters

The legal situation with renters is nuanced. Technically, the property owner is responsible for arnona. However, rental contracts often specify that the tenant pays arnona as part of their housing costs.

In practice, there are several arrangements:

**Tenant Pays Directly **- The rental contract transfers arnona responsibility to the tenant. The tenant's name is registered with the municipality and they receive bills directly. This is common in year-long residential rentals.

**Landlord Pays, Rent Includes Arnona **- The landlord pays arnona and includes this cost in the monthly rent. This is less common but sometimes seen in high-end or short-term rentals.

**Landlord Pays, Tenant Reimburses **- The landlord pays arnona and the tenant reimburses them monthly. This is increasingly rare as it creates administrative hassle.

When renting, your contract should clearly specify who pays arnona. If the tenant pays, you should register with the municipality's arnona department to ensure bills come to you and not the landlord.

Business Tenants

For commercial properties, the arrangement depends on the lease terms. Some commercial leases include arnona in the rent, while others require separate payment by the tenant.

Discounts and Exemptions

Various discounts reduce arnona costs for eligible residents. These can significantly reduce your bill, so it's worth checking what you qualify for.

Standard Discounts

**Senior Citizens **- Residents over a certain age (typically 70) may qualify for discounts, with the percentage increasing at higher ages. Some municipalities offer 50% discounts for those over 80.

**Low Income **- Residents receiving income support (havtachat hachnasa) or below income thresholds set by the municipality may qualify for substantial discounts, sometimes up to 70-90%.

**Disabled Persons **- Residents with recognized disabilities may qualify for discounts ranging from 10% to 50% depending on disability percentage and municipality.

**Single Parents **- Some municipalities offer discounts for single-parent households meeting certain criteria.

**Large Families **- Families with many children sometimes receive discounts in certain municipalities.

**Holocaust Survivors **- Most municipalities offer substantial discounts or full exemptions for Holocaust survivors.

The Olim (New Immigrant) Discount

New immigrants to Israel receive significant arnona discounts during their first years in the country. This is one of several financial benefits designed to ease the absorption process.

Eligibility: Anyone who made aliyah and holds a teudat oleh (immigrant certificate) is eligible. This includes those who arrived under the Law of Return as well as returning residents in certain circumstances.

Discount Structure: The discount typically follows this pattern:

ï           First year: 90% discount (you pay only 10%)

ï           Second year: 70% discount (you pay 30%)

ï           Third year: 50% discount (you pay 50%)

ï           Fourth year: 25% discount (you pay 75%)

ï           Fifth year and onward: No discount (you pay full amount)

Some municipalities offer slightly different schedules, but the above is standard in most cities.

How Much This Saves: For an apartment with annual arnona of 12,000 shekels:

ï           First year: Pay 1,200 ₪ instead of 12,000 ₪ (save 10,800 ₪)

ï           Second year: Pay 3,600 ₪ instead of 12,000 ₪ (save 8,400 ₪)

ï           Third year: Pay 6,000 ₪ instead of 12,000 ₪ (save 6,000 ₪)

ï           Fourth year: Pay 9,000 ₪ instead of 12,000 ₪ (save 3,000 ₪) Over four years, you save 28,200 shekels on this example apartment.

How to Apply: You must actively apply for the olim discount at your municipality's arnona department. Bring your teudat zehut, teudat oleh, and proof of residence (rental contract or property ownership documents).

Some municipalities automatically provide the discount once you register, but many require a specific application. Don't assume it will be applied automatically.

Timing: The discount period begins from your aliyah date, not from when you apply. However, you can only receive retroactive discounts for a limited period (typically up to one year back), so apply as soon as you establish residence.

Renewal: Some municipalities require annual renewal of the discount, while others apply it automatically for the full period. Check with your municipality.

One Property Only: The discount applies to your primary residence only. If you own multiple properties, you can only receive the discount on one.

Student Discounts

Students in certain municipalities may qualify for arnona discounts. This varies widely by city and usually requires proof of full-time student status.

Disability-Related Exemptions

Properties modified for disabled residents or certain types of assisted living facilities may qualify for partial or full exemptions.

Multiple Discounts

In some cases, you can combine certain discounts. For example, an oleh who is also a senior citizen might qualify for both discounts, though municipalities have different rules about discount stacking. Generally, you receive whichever discount is more beneficial, not both combined.

Appealing Your Arnona

If you believe your arnona assessment is incorrect, you have the right to appeal.

Common Grounds for Appeal

**Incorrect Property Size **- If your property is measured incorrectly, you may be overcharged. This is the most common successful appeal ground.

**Wrong Classification **- If your property is classified as commercial but is actually residential, or vice versa, this significantly affects your bill.

**Discount Not Applied **- If you qualify for a discount that wasn't applied, contact the arnona department immediately.

**Duplicate Billing **- Sometimes administrative errors result in being billed for the same property twice.

The Appeal Process

Start by contacting the municipality's arnona department to discuss the issue. Many problems can be resolved at this level.

If informal resolution fails, submit a formal written appeal (arurah) to the municipal assessment committee. Include all supporting documentation (measurements, photos, previous bills, etc.).

The committee will review your appeal and issue a decision. If you disagree with their decision, you can appeal to the regional assessment appeals committee, and ultimately to the courts.

Most appeals relate to property measurements or classifications and can be resolved at the municipal level with proper documentation.

Special Situations

Vacant Properties

Vacant residential properties still owe arnona, though sometimes at reduced rates. If you own property that's empty for an extended period, check whether your municipality offers reduced rates for documented vacancy.

Properties Under Construction

Properties undergoing construction or renovation may qualify for temporary arnona reductions or deferrals. This typically requires obtaining the proper permits and notifying the arnona department.

Mixed-Use Properties

If you live in a property that's partially residential and partially commercial (for example, you have a home office or run a business from part of your home), the classification can be complex. Each portion is typically taxed at its respective rate.

Shared Properties

In shared ownership situations (like inheritances or partnership property), all owners are jointly responsible for arnona. The municipality will typically bill one owner but can pursue any owner for the full amount.

Moving Mid-Period

If you move in the middle of a billing period, arnona responsibility should transfer on the move date. When selling or buying property, the purchase agreement (heskem rechisha) should specify the exact transfer date for arnona liability. When ending a rental lease, ensure the arnona registration is transferred back to the landlord or to the new tenant.

Consequences of Non-Payment

Failing to pay arnona leads to escalating consequences.

Interest and Penalties

Unpaid arnona immediately begins accumulating interest and penalties. These are calculated monthly and tied to the CPI, meaning they increase with inflation. The effective penalty rate is typically 4-5% plus indexing.

Collection Proceedings

After several months of non-payment, the municipality will begin collection proceedings. This can include sending collection agencies after you, filing liens against your property, garnishing bank accounts or wages, and ultimately legal action.

Property Liens

Municipalities can place liens on properties with unpaid arnona. This prevents property sale or refinancing until the debt is cleared. If you're buying property, ensure there are no outstanding arnona debts, as these transfer with the property.

Travel Restrictions

In extreme cases of significant debt, Israeli authorities can impose travel restrictions preventing you from leaving the country until the debt is resolved. This is rare but possible for substantial, long-term non-payment.

Managing Arnona Costs

Given that arnona can be a significant housing expense, managing it effectively matters.

Budget Appropriately

When budgeting for housing costs, include arnona as a major line item. For renters, if you pay arnona separately from rent, remember to budget for six bi-monthly payments annually.

Apply for All Eligible Discounts

Don't leave money on the table. If you qualify for any discounts, apply for them. The olim discount alone can save thousands of shekels annually.

Set Up Standing Orders

Paying via standing order ensures on-time payment, avoids penalties, and usually qualifies for a small discount.

Review Your Bill

Check your arnona bills for accuracy. Verify the property size, classification, and applied discounts. Errors happen, and catching them early prevents overpayment.

Plan for Increases

Municipalities typically raise arnona rates annually. Budget for increases of roughly 2-5% per year to avoid surprises.

Getting Help

If you need assistance with arnona issues, several resources are available:

**Your Municipality's Arnona Department **- Start here for questions about your specific bill, applications for discounts, or appeals. Most municipalities have arnona information on their websites.

**Citizens Rights Organizations **- Groups like the Association for Civil Rights in Israel can help with arnona disputes or understanding your rights.

**Olim Absorption Centers **- If you're a new immigrant, absorption centers often help with arnona registration and discount applications.

**Legal Aid Clinics **- For serious disputes, university legal clinics sometimes handle arnona cases.

**Financial Counselors **- If arnona debts have accumulated and you're struggling to pay, non-profit financial counseling services can help negotiate payment plans.

Conclusion

Arnona is an unavoidable reality of life in Israel, but understanding how it works, what you should be paying, and what discounts you qualify for helps you manage this expense effectively. For new immigrants, the olim discount provides significant savings during your first years in Israel, making this an important benefit to claim.

Whether you own or rent, take time to register properly with your municipality's arnona department, apply for any discounts you qualify for, set up reliable payment systems, and review your bills regularly for accuracy. A bit of attention to arnona can save you significant money and prevent administrative headaches.

Remember, arnona funds the municipal services you use daily, from garbage collection to parks to street maintenance. Understanding this tax and managing it properly is part of being a responsible resident of your Israeli community.

Updated on: 01/02/2026