At what altitude would that have to be set off to not affect Israel?
That is a good question but I think it would be easy to answer with a few calculations. The trick would be to limit the effects to just Iran which means probably that some areas of Iran would have to remain unaffected in order to avoid damaging neighboring countries. Even hitting say the central part of Iran would have disastrous effects on their economy and society. Many innocent people would die but many innocent people will die in any war scenario. The only problem is I don’t think it would damage anything in deep underground bunkers.
The E1 pulse from the EMP weapon (the pulse that damages integrated circuits) is generated by Compton effect electrons in a layer of the atmosphere at a range of between 20 and 40 km in altitude. The burst point needs to be well above this range in order for the gamma rays from the fission to all enter this layer at roughly the same instant.
A burst at an altitude of 60km (about 38 miles or 200,000 ft) gives the E1 pulse a footprint with a radius of about 630 miles.
The problem is not affects on Israel (900 air miles from Tehran) but rather on Bagdad (400 miles) and US forces in the Persian Gulf (400 to 600 miles).