Israel has taken remedial measures with four of these units, making US sanctions less likely. Consultations are under way with Israel over the fifth unit, State Department deputy spokesman Vedant Patel told reporters.
He declined to identify the units, give details of the abuse, or say what measures the Israeli government had taken against them.
A US official speaking on condition of anonymity said the fifth unit is part of the army.
Press reports have identified a battalion called the Netzah Yehuda, composed mainly of ultra-Orthodox Jews, as being accused of abuses.
It is about 1,000-strong and since 2022 has been stationed in the West Bank, which Israel has occupied since 1967.
"After a careful process, we found five Israeli units responsible for individual incidents of gross violations of human rights," Patel said.
All the incidents took place before the October 7 Hamas attack and were not in Gaza, he added.
"Four of these units have effectively remediated these violations, which is what we expect partners to do, and is consistent with what we expect all countries whom we have a secure relationship with," said Patel.
Israel has provided "additional information" about the fifth unit, he added.
US law bars the government from funding or arming foreign security forces against which there are credible allegations of human rights abuses.
The United States provides military aid to allies around the world, including Israel.
The Israeli army has been fighting the militant Palestinian group Hamas in the Gaza Strip for almost seven months and is trading fire almost every day with Hezbollah along the border with Lebanon. Both groups are backed by Iran.
Prime Minister Benjamin Netanyahu reacted angrily to recent news reports that the United States might slap sanctions against a unit of the Israeli military because of human rights abuses, saying the army should not be punished with the country at war.
Patel said the United States is continuing its evaluation of the fifth army unit and has not decided whether to deny it US military assistance.
This case comes with the administration of President Joe Biden under pressure to demand accountability from Israel over how it is waging war against Hamas, with such a high civilian death toll.
In an election year, more people are calling for the United States to make its billions of dollars in annual military aid to Israel contingent on more concern for Palestinian civilians. Pro-Palestinian protests are also sweeping US college campuses.
Hamas' October attack in Israel resulted in the deaths of about 1,170 people in Israel, mostly civilians, according to an AFP tally based on Israeli official figures.
Israel's retaliatory offensive has killed at least 34,488 people in Gaza, mostly women and children, according to the health ministry in the Hamas-run territory.
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