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Washington Bill Threatens To Curb Credit Union Acquisitions Of Banks In Evergreen State

WASHINGTON—A bill has passed in Washington that will have a dampening effect on credit union purchases of banks in this state.

Stverak_medium

Jason Stverak

The legislation just passed in the Washington House (HB 1506) and then the Senate (SB5794) would repeal the business and occupation (B&O) tax exemption for state-chartered credit unions that merge with or acquire a bank regulated by the Department of Financial Institutions in Washington. Effective Oct. 1, 2025, such CUs would be subject to a 1.2% B&O tax on their gross income.

“Unfortunately, this is yet another clear sign that the credit union tax status is under coordinated attack at both the state and federal levels. The banking lobby has made it their mission to undermine credit unions by any means necessary,” said the Defense Credit Union Council’s Jason Stverak. “That’s why the Defense Credit Union Council has remained steadfast and vocal in our commitment to defend the tax-exempt status that enables credit unions to serve their members—not shareholders. We will continue to stand shoulder to shoulder with credit union leaders across the country to fight back against these threats and ensure that the credit union difference is preserved and protected.”

The GoWest CU Association pointed out the state faces a large budget deficit. 

“Despite a historic budget deficit in Washington state, and intense pressure to raise revenue, credit unions’ collective advocacy efforts reinforced the value they provide to 5.5 million members across Washington," said Jennifer Wagner, GoWest EVP and chief advocacy officer. "While taxes were greatly increased for other financial institutions, GoWest is proud of the strong advocacy of credit unions which ultimately protected their corporate tax status. In reality, taxing bank sales to credit unions means no sales, which was an unfortunate decision that will impact consumers and struggling small community banks. That said, Washington’s credit unions have risen to the challenge of filling gaps left by banks in the past and are prepared to continue that well into the future."

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