File Photo: Israeli opposition lawmaker Aryeh Deri in Jerusalem, October 25, 2015.
Under the deal, Deri will also be required to pay a 180,000 shekel (57,000 dollar) fine. But the deal leaves open the possibility that he could return to the Knesset in the near future. The indictment against him will leave out the crime of "moral turpitude,'' which would have barred him from politics for seven years.
The deal sparked criticism from good governance groups, which said it let Deri off easy and paved the way for a swift comeback despite his alleged crimes.
Deri leads the ultra-Orthodox Shas party, which often acts as kingmaker in Israel's coalition governments and currently sits in the opposition.
He is a well-connected, powerful politician whose exit from politics is not expected to loosen his grip on the party. He is widely expected to return to parliament at the helm of Shas whenever next elections are called.
Deri was previously sentenced to three years in prison for bribery, fraud and breach of trust in 2000 during a stint as interior minister in the 1990s. He served 22 months in prison but made a political comeback and retook the reins of Shas in 2013.