The bill for war on Iran. Israel’s 2026 Budget: Defense Inflation at the Expense of Health and Education

Netanyahu’s government faces test of Knesset approval of 2026 budget (Reuters)

Israel’s parliament (Knesset) will vote on the 2026 budget, which includes a massive increase in defense spending, at a time when Israel has waged a war alongside the United States over Iran that has expanded into the Lebanese arena.

According to AFP, the defense budget is expected to increase by about $10 billion, more than double the 2023 budget, before the outbreak of the Israeli war on the Gaza Strip after October 7, 2023.

On February 28, Israel and the United States launched a joint attack on Iran, and the fighting expanded to the Lebanon front after Hezbollah bombed positions in Israel after the assassination of former Iranian leader Ali Khamenei.

On March 15, the Israeli press reported that the government had agreed to provide $827 million in emergency allocations for the purchase of weapons related to the ongoing war on Iran, given the urgent needs resulting from the new situation in the Middle East.

This significant increase in defense spending is expected to lead to a 3% reduction in the budgets of all other ministries such as education, health, and social services.

In contrast, the government of Israeli Prime Minister Benjamin Netanyahu, whose survival depends on the support of his far-right allies and religious people close to the settlers, has agreed to a significant increase in the funds allocated exclusively to them, according to the same source.

Religious far-right parties will receive more than $715 million in budget increases for private educational institutions they control through their associations.

Despite the significant cuts the government has imposed on all civilian budgets, settlement funding has remained unchanged, according to a report by Israel’s Peace Now.

The report described these actions as “the public robbery of public funds for the benefit of a small group within the government base. “While the government is shrinking budgets inside Israel, it is pumping money into the settlements.”

On December 4, 2025, the Israeli government decided to invest $836 million over the next five years in settlement development.