The Authority said it would pay Palestinian public sector employees 50% of their March salaries on Tuesday, after Israel withheld a transfer due for the month of April.
It said the arrears would be paid once the financial situation allowed.
The Israeli finance ministry confirmed it had been decided not to transfer tax revenues this month but declined to provide details.
The squeeze on public sector salaries, and the fact that tens of thousands of Palestinians have been prevented from working in Israel since the start of the war in Gaza in October, have added to growing economic hardship in the occupied West Bank.
Israel collects tax on goods that pass through Israel into the West Bank on behalf of the Palestinian Authority and transfers the revenue to Ramallah under a longstanding arrangement between the two sides.
But since the Hamas-led attack on Israel, the Israeli Finance Minister Bezalel Smotrich has withheld sums earmarked for administration expenses in Gaza.
Although the Islamist movement Hamas wrested control of Gaza from the rival Fatah faction in 2007, the Palestinian Authority, which is dominated by Fatah, continues to fund some health and education services in the enclave.
