How Much Does Israel Spend on Defence? 7.8% of GDP in 2025
Israel’s defence spending was 7.8% of GDP in 2025 on the Bank of Israel’s count, with a revised net defence budget of NIS 161.8 billion.
Israel’s defence spending was 7.8% of GDP in 2025, the Bank of Israel reported in its Annual Report 2025, measured as central government defence expenditure on the budget definition. That was down from 8.4% in 2024 and above the 2015 to 2019 average of 5.3%. In shekels, the Bank of Israel puts the revised net defence budget for 2025 at NIS 161.8 billion.
| Figure | What it counts | Who published it | Period |
|---|---|---|---|
| 7.8% | Central government defence expenditure as a share of GDP, budget definition, net of US defence assistance | Bank of Israel | 2025 |
| 5.3% | The same measure, averaged | Bank of Israel | 2015 to 2019 |
| NIS 161.8 billion | Net defence budget after revision, current prices | Bank of Israel | 2025 |
| About NIS 350 billion | Fiscal cost of the war, an estimate with 2026 as a forecast year, excluding the 2026 Iran campaign | Bank of Israel | 2023 to 2026 |
| NIS 25 billion | Share of the war’s cost financed by a special US grant | Bank of Israel | 2024 to 2026 |
| NIS 2,108 billion | Gross domestic product at current prices, second estimate | Central Bureau of Statistics | 2025 |
Defence spending was 7.8% of GDP in 2025
The Bank of Israel records central government defence expenditure, on the budget definition, at 7.8% of GDP in 2025. The share was 4.2% in 2022 and 5.2% in 2023, then rose to 8.4% in 2024. The Bank’s central government figures are net, excluding expenditure conditional on revenues such as US defence assistance.
The Central Bureau of Statistics estimated GDP at NIS 2,108 billion in 2025 at current prices, a real rise of 2.9%, in its second estimate of 10 March 2026. The Bank of Israel also publishes a second definition, general government on a national-accounts basis, in separate rows of the same table:
| Measure | Definition | 2024 | 2025 |
|---|---|---|---|
| Domestic defence consumption | General government, national accounts | 6.8% of GDP | 6.5% of GDP |
| Defence imports | General government, national accounts | 0.8% of GDP | 0.7% of GDP |
Source: Bank of Israel, Annual Report 2025, Chapter 6, Table 6.1. Since 2022, defence investment is recorded outside defence consumption on this definition.
The net defence budget was revised to NIS 161.8 billion
The Bank of Israel records a net defence budget of NIS 161.8 billion for 2025 after revision, against NIS 129.7 billion in the original budget. The defence budget was revised upward in each of the three years shown. These are net figures in current shekels, so defence spending financed by US assistance sits outside them.
| Year | Original net defence budget | Revised net defence budget |
|---|---|---|
| 2023 | NIS 76.6 billion | NIS 94.2 billion |
| 2024 | NIS 78.5 billion | NIS 163.8 billion, after the December revision |
| 2025 | NIS 129.7 billion | NIS 161.8 billion |
Source: Bank of Israel, Annual Report 2025, Chapter 6, Figure 6.2, net defence budget in current NIS billion, as printed in the chart’s data labels.
The war cost about NIS 350 billion from 2023 to 2026
The Bank of Israel estimates the fiscal cost of the war that began on 7 October 2023 at about NIS 350 billion over 2023 to 2026; its Table 6.2 prints NIS 352 billion. Of that, NIS 249 billion is gross defence expenditure, counted as the increment above the pre-war multiyear defence agreement rather than as total defence spending. 2026 is a forecast year in the estimate, which excludes the campaign against Iran that began in late February 2026 and its damages.
- In 2025 the war’s increment was NIS 116 billion, of which NIS 84 billion was defence.
- The four-year cost runs across several years and is a separate measure from any single year’s budget.
| Year | Central government budget deficit, share of GDP |
|---|---|
| 2023 | 4.1% |
| 2024 | 6.7% |
| 2025 | 4.7%, against an original target of 4.9% |
Source: Bank of Israel, Annual Report 2025, Chapter 6, Table 6.1 and chapter summary, central government budget definition.
A US grant financed NIS 25 billion of the war’s cost
The Bank of Israel records that a special grant from the United States financed NIS 25 billion of the war’s cost over 2024 to 2026. The amounts appear among the financing methods in Table 6.2, where 2026 is a forecast year.
| Year | Financed by the special US grant |
|---|---|
| 2024 | NIS 13 billion |
| 2025 | NIS 6 billion |
| 2026 | NIS 6 billion, forecast year |
Source: Bank of Israel, Annual Report 2025, Chapter 6, Table 6.2.
The US Department of State published the Memorandum of Understanding on security assistance, signed at Washington on 14 September 2016 and covering FY2019 to FY2028. Its text states that the funding levels “are subject to the appropriation and availability of funds.” An accompanying letter records Israel’s commitment not to seek Foreign Military Financing above the agreed levels for the duration, and to return any additional 2017 or 2018 financing granted outside the framework.
No 2026 defence budget appears in the Bank’s 2025 report
The Bank of Israel’s Annual Report 2025 carries no defence budget for 2026. Its Figure 6.2 and Table 6.1 run to 2025. The only 2026 figures in the chapter are the war-cost estimate, where 2026 is a forecast year, and the NIS 6 billion US grant.
A 2026 defence figure sits in three places, none of them among the sources below:
- The Budget Law for 2025 to 2026, enacted by the Knesset.
- The 2026 budget proposal and its defence chapter, prepared by the Ministry of Finance Budget Division, which is the government’s own allocation figure on its own budget definition.
- The Ministry of Defence’s own allocation, which is the ministry’s own figure for its own budget.
Which figures may not be added together?
The budget-definition share and the national-accounts shares may not be added, and the war cost may not be added to any annual budget. The 7.8% is central government on the budget definition; the 6.5% and 0.7% are general government on national accounts, a different measure. The NIS 350 billion is a four-year estimate, and its NIS 249 billion defence part is an increment above the pre-war agreement. The Bank’s budget figures are net of US defence assistance, so a total that adds US aid to them is a separate construction. The 7.8% multiplied by the Bureau’s GDP is not the Bank’s shekel figure, which the Bank publishes directly.
Questions readers ask
What share of GDP did Israel spend on defence before the war?
The Bank of Israel records central government defence expenditure at an average of 5.3% of GDP in 2015 to 2019, and 4.2% in 2022. Both are on the budget definition.
Did Israel’s defence spending fall in 2025?
As a share of GDP, yes. The Bank of Israel records 7.8% in 2025 against 8.4% in 2024, on the central government budget definition.
How large was Israel’s economy in 2025?
The Central Bureau of Statistics estimated GDP at NIS 2,108 billion in 2025 at current prices, in its second estimate of 10 March 2026. Later releases may revise it.
Does the defence figure include US military aid?
No. The Bank of Israel publishes central government expenditure net, excluding expenditure conditional on revenues, such as defence assistance from the US.
How much was Israel’s defence budget in 2024?
The Bank of Israel records a net defence budget of NIS 78.5 billion in the original 2024 budget and NIS 163.8 billion after the December revision, in current shekels.
How much of the war’s cost went to defence?
The Bank of Israel estimates gross defence expenditure at NIS 249 billion of the war’s roughly NIS 350 billion cost over 2023 to 2026. The NIS 249 billion is the increment above the pre-war multiyear agreement.
Does the war cost include the 2026 campaign against Iran?
No. The Bank of Israel states that its estimate excludes the campaign that began in late February 2026 and its damages.
How much did the war add to spending in 2025?
The Bank of Israel estimated the war’s 2025 increment at NIS 116 billion, of which NIS 84 billion was defence.
How large was Israel’s budget deficit in 2025?
The Bank of Israel records a central government budget deficit of 4.7% of GDP in 2025, against an original target of 4.9%, after 6.7% in 2024.
What is the national-accounts measure of defence spending?
The Bank of Israel records general government domestic defence consumption at 6.5% of GDP and defence imports at 0.7% in 2025. This is a different definition from the 7.8%.
How much did the US grant finance in 2025?
The Bank of Israel records that the special US grant financed NIS 6 billion of the war’s cost in 2025, and the same amount in 2026, a forecast year.
Does the 2016 security memorandum guarantee US funding?
The US Department of State published the memorandum text, which states that funding levels “are subject to the appropriation and availability of funds.” It sets a level and schedule rather than obligating money.
Which years does the US security memorandum cover?
The US Department of State published the memorandum signed on 14 September 2016, covering FY2019 to FY2028.
Where is Israel’s 2026 defence budget set out?
In the Budget Law for 2025 to 2026 enacted by the Knesset. The Bank of Israel published no 2026 defence budget in its Annual Report 2025.
Sources
- Bank of Israel, 2026. Annual Report 2025, Chapter 6: The Public Sector and its Financing. https://boi.org.il/media/u4zp5dm5/chap-6e-2025.pdf. Official or primary record.
- Central Bureau of Statistics, 2026. Israel’s National Accounts 2025: Second Estimate. Media release 073/2026, 10 March 2026. https://www.cbs.gov.il/en/mediarelease/Pages/2026/Israel-National-Accounts-2025-Second-Estimate.aspx. Official or primary record.
- US Department of State, 2016. Memorandum of Understanding Between the United States and Israel on Security Assistance. Signed at Washington, 14 September 2016. 2009-2017.state.gov/documents/organization/265160.pdf. Official or primary record.
