Israel collects taxes on goods passing through it to the West Bank on behalf of the Palestinian Authority and transfers the revenues to Ramallah under a long-standing arrangement between the two sides.
Israeli Finance Minister Bezalel Smotrich has been withholding funds allocated for administrative spending in Gaza since October 7.
Israel also deducts money for electricity, water and the cost of treating Palestinians in Israeli hospitals.
Palestinian officials say the amount is much less than the taxes collected each month even after these deductions.
Smotrich, an ultranationalist, opposes sending money to the Palestinian Authority, which uses it to pay public sector workers.
The Palestinian Authority currently pays only 50 to 60 percent of salaries.
Smotrich last week agreed to transfer the funds this month after receiving concessions from the Israeli government on sanctions on Palestinian Authority officials and the legalization of five Israeli settlements in the West Bank.
The Palestinian Authority said in a statement after its government meeting on Wednesday that its contacts and international pressure led Israel to transfer the funds.
She added that she would push to recover more than six billion shekels of withheld funds to meet her financial obligations.
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