Senator Justin Wayne of Omaha introduced LB 1225 which would eliminate the state’s Financial Institution’s Franchise Tax paid by state-chartered credit unions and banks in lieu of state corporate income tax and subject them to the state corporate income tax.
In Nebraska, there are fifty-eight credit unions with just eleven of those being chartered with the State of Nebraska. The League has indicated their opposition to LB 1225 citing an increase in the tax burden that state-chartered credit unions would pay and that the bill, if passed, would lead to a flight from the state charter to the federal charter. The League does not advocate for one charter over the other but supports the dual-chartering system whereby credit unions can choose which charter is best for their credit union. “Nebraska is an outlier when it comes to the financial institution’s tax with only two other states subjecting credit unions to the tax and LB 1225 would make Nebraska even more of an outlier with only Indiana imposing a state corporate income tax on their credit unions” said Brandon Luetkenhaus, Chief Advocacy Officer of the Nebraska Credit Union League.
The bill will have a public hearing before the Nebraska Legislature’s Revenue Committee, but a date has not yet been set.
