How Much Money Does the US Give Israel Each Year?

It comes from a memorandum of understanding (MOU) that the Obama administration and Israel signed on September 14, 2016. The agreement pledged $33 billion in Foreign Military Financing and $5 billion for missile defense over the 10 fiscal years from October 2018 to September 2028.

It is the third such deal. The first, covering 1999 to 2008, pledged $21.3 billion in military aid and set out a gradual end to the economic aid Israel had received for decades. The second, agreed in 2007 under George W. Bush, gave $30 billion for fiscal 2009 to 2018, about $3.1 billion a year in military grants.

An MOU is a political promise, not a law. It needs no Senate ratification, and the money only flows when Congress appropriates it each year. Congress has appropriated the agreed amounts throughout the current deal: in fiscal 2025, the last fully reported year, about $3.3 billion in Foreign Military Financing was obligated to Israel, all of it for military purposes.

Almost all of it buys American-made weapons. Foreign Military Financing has paid for much of the Israeli Air Force’s modernization, including the F-35I Adir stealth fighter, the F-15IA strike jet and KC-46A tankers, all built by U.S. manufacturers.

Israel also receives the money on unusually generous terms. Since fiscal 1991, Congress has required that Israel’s annual grant be paid as a lump sum within the first month of the fiscal year, and the funds sit in an interest-bearing account at the Federal Reserve until they are spent. Under the 2007 agreement Israel could spend up to 26.3 percent of the grant on its own defense industry, an allowance known as offshore procurement. The 2016 deal phases that share down to zero by fiscal 2028, so by the end of the agreement every dollar must be spent in the United States.

The separate $500 million a year co-funds Israel’s layered air defenses: Iron Dome against short-range rockets, David’s Sling against medium-range rockets and cruise missiles, and Arrow 2 and Arrow 3 against ballistic missiles. Much of that interceptor production now takes place in the United States, and the war with Iran in 2026 has used up interceptors at a heavy rate. What a single Iron Dome interception costs shows why that line matters.

The United States has given Israel about $175 billion in nominal dollars from 1946 to 2025, more than any other country has received since World War II. Adjusted for inflation, the total comes to roughly $300 billion.

For decades much of the money was economic aid. The 1999 agreement phased that out, and since then nearly every dollar has been military. The annual grant covers about 14 percent of Israel’s defense budget, a share that has fallen as Israel’s own spending has grown: Israel spent 8.8 percent of its GDP on defense in 2024.

On top of the yearly $3.8 billion, Congress passed a supplemental spending law in April 2024 that added $3.5 billion in Foreign Military Financing and $5.2 billion in defense funding for Israel. Of that $5.2 billion, $4 billion went to Iron Dome and David’s Sling and $1.2 billion to Iron Beam, Israel’s laser air-defense system, the first U.S. money for that project.

Washington has also approved tens of billions of dollars in arms sales to Israel since the Hamas attack of October 7, 2023, much of it paid for with Foreign Military Financing. Sales are not aid in themselves, and Trump said on November 3 that Israel could keep buying American weapons after the grants stop.

Israel is the largest recipient of U.S. military grants by a wide margin. Egypt, the second-largest, receives about $1.3 billion a year in Foreign Military Financing, roughly a third of Israel’s annual sum. Both grants grew out of the peace Egypt and Israel made in 1979.

In fiscal 2025 Israel took about 9.5 percent of all bilateral U.S. foreign aid. Measured against the federal budget, the $3.8 billion is well under 0.1 percent of U.S. government spending.

He cannot do it alone. Because the MOU is not binding and Congress controls the money, ending the grants early would require Congress to stop appropriating them, or the administration to stop requesting them, and both leaders to set the agreement aside two years before it expires.

Israel’s leaders had already signaled the change. In an interview published on January 9, 2026, Netanyahu said he wanted to taper American military aid to zero within about a decade and called the plan “in the works.” The two governments have been negotiating a fourth agreement to follow the current one after 2028, and Israel has pushed for joint research and production to take the place of grants. Trump’s statement moves that timeline from a decade to less than two months, and it comes while Israel’s own politics are unsettled after an election that left neither bloc with a majority.