Washington state recently enacted a tax on credit unions that acquire or merge with a bank.
Details: Effective Jan. 1, 2026, Washington state-based credit unions that acquire a bank are now subject to the state’s business and occupation tax of 1.2%.
Advocacy: The Community Bankers of Washington advocated for the law, noting that the B&O tax exemption for credit unions costs the state approximately $130 million per year. The CBW said if the record pace of credit union acquisitions of community banks continues, local businesses will be deprived of the primary mechanism for reinvestment in Main Street.
ICBA View: In a new Banking Dive article, ICBA Senior Vice President and Regulatory Counsel Michael Emancipator said the Washington lawmakers got it right. “Community bankers applaud state legislative efforts to mitigate revenue loss each time tax-paying community banks are acquired by a tax-exempt credit union,” he said.