The Knesset passed a bill in its second and third readings giving parents child tax credits.
The Joint Arab List supported the bill, which allowed it to pass even as the opposition parties announced that they would oppose all government legislation.
The bill results from an initiative by Israeli Finance Minister Avigdor Lieberman as he grapples with the steadily rising cost of living.
According to a report in the business daily Globes on Tuesday, the bill will give a tax credit point for each child between the ages of 6 and 12. Each credit point is worth NIS 2,796 ($835) and applies to 610,000 working parents.
The bill will cost 500 million shekels ($149 million).