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Intended audience: Credit unions merging with, or acquiring, banks regulated by the Department of Financial Institutions.
Effective Jan. 1, 2026, a credit union organized under the laws of Washington that merges with or acquires a bank that is regulated by the Department of Financial Institutions is subject to business and occupation (B&O) tax.
How do I report?
Credit unions subject to B&O tax must report gross income under the Credit Union tax classification. The tax rate for this classification is 1.2%. Income subject to this classification is apportionable under WAC 458-20-19404.
Are there any exceptions
Yes. The following remain exempt from B&O tax:
- Washington credit unions that submitted an application for regulatory approval before Jan. 1, 2026.
- Credit unions organized under the laws of any other state.
- Federally chartered credit unions.
More information
RCW 82.04.405 Credit union – Tax – Exemptions.
Engrossed Senate Substitute Bill (ESSB) 5794, Chapter 423, Laws of 2025 (Sec. 104).
Questions?
Please call 360-705-6705, or you may request a ruling.