Four States Apply Some Type of Tax On State Charters

With the repeal of California's franchsie tax on credit unions two years ago there are only four other states that apply a tax on credit unions, other than sales taxes. In Iowa, state-chartered credit unions pay a "Monies and Credit Tax" that amounts to 0.5% of legal and special reserves. Oklahoma assesses a 6% "In Lieu Tax" on the income of state charters, similar to the corporate income tax paid by banks. Indiana credit unions pay the state's "Financial Institutions Tax," which is 8.5% of net transfers to undivided earnings. And state charters in Rhode Island pay the same "Deposit Tax" paid by banks, which amounts to 6.25 cents per $100 of the average daily deposits for credit unions under $150 million in assets, and 6.95 cents per $100 for those over $150 million in deposits.