The Nebraska Credit Union League testified before the Nebraska Legislature’s Revenue Committee on February 25th in opposition to LB 1225 introduced by State Senator Justin Wayne of Omaha. The bill would eliminate the state’s Financial Institution’s Franchise Tax and instead subject all state-chartered credit unions to the state’s corporate income tax.
In their testimony, the League warned that passing LB 1225 would significantly increase the tax burden on Nebraska’s state-chartered not-for-profit credit unions. Furthermore, the League identified two consequences of 
passing the bill to include a flight from the state charter to the federal charter and the fact that for-profit Subchapter S banks, of which there are fifty-seven in Nebraska, would avoid paying the franchise tax because it would be eliminated and they are exempt from paying the state’s corporate income tax, while not-for-profit credit unions would pay the corporate income tax under LB 1225.
The League further argued that Nebraska is currently an outlier when it comes to subjecting the state’s credit unions to the franchise tax and that passing LB 1225 would make the state more uncompetitive by increasing the tax burden on credit unions. There were no proponents testifying in support of LB 1225.
In Nebraska, there are fifty-eight credit unions with eleven being stated chartered and forty-seven being federally chartered. There are one-hundred and forty-six state banks and ten national banks.
