Firefighters, rescue workers and military personnel work at the site of a direct missile strike launched from Iran in Tel Aviv, on June 22, 2025. (Credit: AFP)
Israel has sustained an estimated $12 billion in direct losses from its 12-day war with Iran, according to Israeli media and official economic reports released Wednesday. To finance the war’s costs, Israel is expected to raise its national budget deficit to around six percent — well above the Finance Ministry’s previous 4.9 percent cap.
The estimated costs include military expenditures, missile damage, reconstruction efforts, and compensation to civilians and businesses. Analysts project the total could rise to $20 billion once indirect damages and civilian compensation are fully calculated.
Israeli news outlet Yedioth Ahronoth reported that the Israeli treasury has already absorbed 22 billion shekels (approximately USD$6.46 billion) in war-related costs.
According to Israeli authorities, while Iran launched more than 550 ballistic missiles, only 31 impacted populated areas. Twenty-eight people were killed by Iranian strikes. In Iran, Israel's bombing campaign killed hundreds.
In response to the damage and depletion of defense resources, the Israeli military has requested an additional 40 billion shekels ($11.7 billion) to restock munitions and sustain reserve forces. This comes after prior funding requests of 10 billion and 30 billion shekels, which were made before Israel instigated the war with its June 13 bombing campaign against Iran.
Iran responded to the Israeli attack, which wiped out a large number of senior Iranian officials, several nuclear scientists and killed dozens of civilians, with a missile barrage toward Israel, with numerous projectiles bypassing Israeli defense systems and striking targets in Israel.
Tel Aviv, Haifa, in northern Israel and Beersheba in the southern Negev desert, were among some of the hardest hit in the 12 days of fighting that followed.
Rehabilitating damaged Israeli homes alone could cost an additional one to 1.5 billion shekels, or between $294 million and $440 million.
According to estimates, military operations — including aerial campaigns, logistics, and the cost of reserve unit mobilization — account for around 10 billion shekels ($2.9 billion) of the losses. Another five billion shekels ($1.5 billion) is tied to damages from Iranian missile strikes on buildings and infrastructure. An additional 5 billion shekels ($1.5 billion) has been allocated for compensation to displaced residents, business owners, and workers.
A source at Yedioth Ahronoth claimed that Iran's missiles caused nearly double the damage total from the Hamas attack on Oct. 7 and the fighting that followed. So far, about 40,000 claims have been filed by citizens and businesses, and the head of the Tax Authority’s compensation department Amir Dahan predicted the number could reach 50,000 or more.
Strategic facilities such as the Weizmann Institute of Science in Rehovot and the Bazan oil refinery in Haifa were directly hit, causing major disruptions. A building at the 'Israeli Pentagon' was also struck, in Iran's initial retaliatory attack. The Kirya, as it's known, is located in the heart of Tel Aviv and includes a vast underground compound.
Turning to the US again
During the war’s first week, Israel spent approximately $5 billion, or $725 million per day, on offensive operations and defense, according to the Financial Express. The Wall Street Journal reported that the operation of Israel’s missile defense systems alone cost between $10 million and $200 million per day.
A source in the Finance Ministry told Yedioth Ahronoth that “Israel may seek additional financial support from the United States, either through direct aid or loan guarantees,” to meet its urgent defense and recovery needs.
The cost also extends into market losses. Ben Gurion Airport, Israel’s main international gateway, suspended most flights. Normally, it handles about 300 flights and 35,000 passengers daily. El Al, Israel’s national airline, suspended operations and rerouted aircraft to avoid Iranian missile paths, suffering $6 million in losses.
The Israeli diamond exchange, which accounts for about eight percent of national exports, was also hit, causing panic among investors and a dramatic market selloff.
Despite a U.S.-brokered cease-fire that halted the conflict Tuesday morning, the financial and social impacts of the war remain significant. Dahan is quoted as saying, “We have never encountered this scale of damage in so short a time. The long-term implications for Israel’s economy are still unfolding.”
