US Tax Rules for Donating to Israeli Charities

You want to support a hospital in Jerusalem, a yeshiva in Bnei Brak, or a food bank in the Negev, and you assume the gift works like any other charitable donation on your US return. Then your accountant asks a question that stops you cold: is the recipient a US organization? Because if you wrote a check straight to the Israeli charity, the answer is almost certainly no, and the deduction you were counting on may not exist.

American giving to Israeli causes runs into the billions of dollars a year, and most of it is structured to survive exactly this problem. The rules are not intuitive, they sit at the intersection of US and Israeli tax law, and getting them wrong costs you the deduction while helping no one. Here is how a US donor, whether living in New York or in Netanya, actually secures the tax benefit for a gift that reaches Israel.

The starting point: US law rewards American charities, not foreign ones

The US income tax deduction for charitable gifts lives in Internal Revenue Code section 170, and it carries a territorial catch. The deduction is available only for contributions to organizations "created or organized in the United States." A direct gift to an Israeli amuta (nonprofit association), however worthy, fails that test. You can send the money, the charity can put it to beautiful use, and none of it lands on your Schedule A.

That single rule explains almost everything about how Americans give to Israel. It is not that giving abroad is discouraged in practice. It is that the deduction has to be engineered, and there are three ways to do it: an American intermediary, the treaty, or a bequest.

Route one: the American Friends organization

The workhorse of US-Israel philanthropy is the "American Friends of" structure. A US 501(c)(3) public charity is formed in the United States, it qualifies under section 170, and it makes grants to Israeli beneficiaries. You donate to the US organization, take your ordinary deduction, and the funds flow onward to Israel.

The one condition that makes or breaks it is control. The US charity must retain genuine discretion over how the money is used and cannot act as a mere conduit that passes an earmarked gift straight through to a pre-chosen Israeli recipient. If you hand the American Friends organization a check "for the Jerusalem hospital, no other purpose," and the charity is contractually bound to obey, the IRS can treat the gift as one to the foreign charity and disallow it. A properly run American Friends organization exercises real oversight, and that is what preserves your deduction. Subject to that, your gift is deductible within the normal limits, generally up to 60% of adjusted gross income for cash and 30% for appreciated property.

Route two: the US-Israel treaty, if you have Israeli-source income

Israel is one of only three countries whose income tax treaty with the United States lets a US donor deduct a gift made directly to that country's charities. The others are Canada and Mexico. The provision is Article 15-A of the US-Israel income tax treaty, and it is narrower than it first sounds.

Under Article 15-A, a contribution to an Israeli charitable organization is deductible on your US return if the organization would have qualified as a charity had it been created under US law. But the deduction is capped at 25% of your adjusted gross income arising from Israeli sources. If you have no Israeli-source income, the ceiling is zero and the treaty gives you nothing. If you own an Israeli rental apartment or draw income from Israeli investments, the treaty opens a direct-giving lane up to that quarter of your Israeli income.

There is a second, quieter benefit. The treaty's charitable article survives the saving clause, the provision that otherwise lets the United States tax its citizens as if the treaty did not exist. That means a US citizen living in Israel can rely on Article 15-A for gifts running the other way too, deducting contributions to US charities against US-source income on the Israeli side, a mirror of the same rule. The mechanics of the treaty as a whole are set out in our US-Israel tax treaty guide.

The Israeli side: the section 46 credit

Israel encourages giving through a credit rather than a deduction. Section 46 of the Income Tax Ordinance grants a 35% tax credit for individuals who donate to a mosad tziburi (public institution) that holds a live section 46 approval. For every shekel donated to an approved institution, 35 agurot come back as a credit against Israeli tax.

This matters to a US person only to the extent they actually pay Israeli tax. A pure non-resident with no Israeli income has no Israeli liability to credit against, so section 46 is irrelevant to them and the US routes above are the whole story. An American with Israeli rental income, or an oleh whose ten-year foreign-income exemption has ended and who now pays Israeli tax on a pension or investments, can use section 46 to cut that Israeli bill.

In Practice: Under section 46 of the Income Tax Ordinance, a donation of at least NIS 207 (2026) to an institution holding a section 46 approval earns a 35% credit against Israeli tax, capped at the lower of 30% of taxable income or NIS 10,354,816 (2026), with any excess carried forward for three years. The credit is claimed on the annual return (Form 1301, due 30 April) and processed through the Israel Tax Authority digital donations system, which typically matches an electronic receipt within the filing cycle. Keep the original Israeli receipt bearing the institution's approval number.

In Practice: A recipient must hold a genuine, current section 46 approval issued by the Israel Tax Authority, and the underlying association must be registered with the Registrar of Associations (Rasham HaAmutot) at the Ministry of Justice. Section 46 approvals are time-limited and renewed periodically, so an institution approved five years ago may not be approved today. Above the NIS 207 minimum, a donor, or an American Friends organization sending funds to an Israeli grantee, should confirm the approval on the Israel Tax Authority list before transferring, a check that takes minutes and prevents a disallowed credit.

Gifts at death: the estate tax rule is more generous

The most counter-intuitive point in this area is that giving to an Israeli charity in your will works better under US law than giving during your lifetime. The income tax's domestic-only rule in section 170 does not carry over to the estate tax. Under IRC section 2055, a US estate is allowed a charitable deduction for a bequest made directly to a foreign charity, including an Israeli one, as long as the gift is for exclusively charitable purposes. US courts have upheld exactly this, allowing an estate deduction for property left to an institution in Israel.

So a US person can leave Israeli assets, or any assets, to a bona fide Israeli charity in a will and reduce the taxable estate, even though a lifetime check to the same charity would not have been income-tax deductible. With the 2026 US estate and gift tax exemption at USD 15 million per person, this matters mainly to larger estates, but for those donors it is a clean and often overlooked planning tool. The interaction with an Israeli will and Israeli succession is worth coordinating in advance; see our discussion of leaving Israeli assets to charity in a will.

Common Mistake: Writing a check straight to an Israeli amuta and claiming it on Schedule A. A US donor with no Israeli-source income has no route to that deduction: section 170 excludes the foreign charity, and Article 15-A of the treaty is capped at 25% of Israeli-source income, which is zero. The IRS disallows the deduction on audit and can add a 20% accuracy-related penalty on the underpayment. The fix is almost always to give the same amount through a US "American Friends" 501(c)(3), which supports the identical Israeli cause and is fully deductible.

Substantiation on both sides

US substantiation rules apply as usual. For any single gift of USD 250 or more you need a contemporaneous written acknowledgment from the US charity under section 170(f)(8), and non-cash gifts above set thresholds trigger appraisal and Form 8283 requirements. On the Israeli side, the Tax Authority is strict about original receipts rather than scans, each showing the institution's section 46 approval number. A donor using both systems, an American Friends deduction in the US and a section 46 credit in Israel on the same underlying support, should keep the two paper trails separate and clean.

Practical Checklist

• Confirm whether the recipient is a US 501(c)(3) or an Israeli amuta before you give, because that determines your entire US treatment
• For a US deduction with no Israeli income, give through an American Friends organization that retains real discretion over the funds
• If you have Israeli-source income, ask whether Article 15-A lets you give directly, up to 25% of that Israeli-source income
• If you pay Israeli tax, confirm the recipient holds a current section 46 approval and claim the 35% credit on your Israeli return
• Verify the section 46 approval on the Israel Tax Authority list before transferring, since approvals expire
• Keep original Israeli receipts with the approval number, and US written acknowledgments for gifts of USD 250 or more
• For larger estates, consider a direct charitable bequest of Israeli assets, which qualifies for the US estate tax deduction under section 2055

Speak With an Israeli Attorney

Getting a tax benefit for a gift to Israel is rarely about generosity and almost always about structure: which entity receives the money, whether you have Israeli-source income, and whether the recipient's section 46 approval is live. An Israeli attorney, working alongside your US advisor, can confirm the recipient's status, position a gift to use both the treaty and the section 46 credit where possible, and coordinate a charitable bequest with your Israeli estate plan.

Contact us for a confidential initial consultation.