Ministry of Finance tightens green tax formula: thousands of car models may see price hikes from January 2027
The Ministry of Finance has published an updated formula for calculating green tax benefits, which may lead to price increases of thousands of shekels for many models starting in January.
The Ministry of Finance distributed an updated pollutant formula to car importers today, Monday, which determines the "green score" assigned to every vehicle imported into Israel. This score categorizes all vehicles into one of 15 groups, which in turn dictates the level of the "green tax" benefit.
Initial analysis indicates that the formula values have been significantly tightened compared to previous iterations. This implies a price increase estimated at approximately 3,000 to 8,000 shekels for many car models starting from January 2027, unless importers choose to absorb these costs. The price hikes are expected to affect primarily the "greenest" models, specifically hybrids, excluding electric vehicles, which do not receive green tax benefits.
The formula reveals that the Ministry of Finance ignored recommendations from the Ministry of Environmental Protection to include new pollution metrics not directly related to exhaust emissions—such as tire wear—which were intended to reduce benefits for plug-in hybrid vehicles.
