The Israeli government has paved the way for certain yeshivos to lose valuable tax benefits after informing the High Court that Torah institutions will now be required to certify that none of their talmidim are subject to military service and have failed to regularize their status.

The policy centers on Section 46 of Israel’s Income Tax Ordinance, which allows donors to approved nonprofit organizations—including yeshivos—to receive tax credits for their contributions. A petition filed by the “Israel Hofsheet” organization argued that institutions with talmidim who are obligated to serve in the military but have not resolved their status should not qualify for those tax benefits.

During Thursday’s court hearing, the state largely adopted the petitioners’ position, announcing that yeshivos seeking to obtain or renew Section 46 approval will be required to declare that none of their talmidim fall into that category. Institutions will also be required to submit relevant student lists for review.

According to the state, letters have already been sent to 147 Torah institutions. Even yeshivos that already hold valid Section 46 approval will be required to submit documentation demonstrating compliance. Institutions found not to meet the new requirements could face proceedings to revoke their approval after a hearing.

Following the state’s announcement, the High Court ruled that the petition had become moot because the government had already accepted the core of the petitioners’ demands and begun implementing the new policy. The petition was dismissed without costs, and the court emphasized that it was not ruling on the legality of the new policy itself. Institutions affected by the changes will be able to file separate legal challenges.

Notably, the Netanyahu government and Finance Minister Betzalel Smotrich did not present a legal challenge to the state’s position or seek separate representation before the court. As a result, the policy advanced without the High Court having to issue a substantive ruling compelling the government to act.

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