Tax Policy
Tax laws should promote robust economic activity and a vibrant community banking sector and foster saving and investment. ICBA opposes any new bank-specific fees, punitive new tax levies, transaction taxes, limitations on the deductibility of FDIC premiums, or other proposals specifically targeting the financial services sector.
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Position & Background
Tax laws should promote robust economic activity and a vibrant community banking sector and foster saving and investment.
ICBA strongly supports the 2025 One Big Beautiful Bill Act which permanently extended critical, expiring provisions of the 2017 Tax Cuts and Jobs Act. These include the individual rate structure, the estate tax exemption, and the deduction for pass-through income (Section 199A).
ICBA supports Section 139L of OBBBA, which is based on the Access to Credit for the Rural Economy (ACRE) Act. ICBA urges Congress to increase the percentage income exclusion of Section 139L from 25 percent to 100 percent.
ICBA urges Congress to create a tax exclusion for community bank retained earnings to strengthen community banks and promote community lending.
ICBA opposes any new bank-specific fees, punitive new tax levies, transaction taxes, limitations on the deductibility of FDIC premiums, or other proposals specifically targeting the financial services sector. Additionally, ICBA will continue to oppose any legislation – tax or non-tax – that requires revenue offsets or “pay fors” that target the banking industry, in particular account reporting to the IRS.
Public policy should support community banks’ ability to raise capital including allowing S corporation banks to issue preferred stock, increasing their shareholder limits, and allowing new IRA shareholder investments.
ICBA supports the creation of tax incentives for community bank retained earnings and community bank lending to low-to-middle income individuals and small businesses.
The tax code should create parity among all providers of financial services. Credit unions, Farm Credit System lenders, and community banks offer similar products and services and should be taxed equivalently. ICBA advocates for the taxation of credit unions with assets of $1 billion or more.
ICBA supports tax incentives to encourage deposits and investments in minority depository institutions (MDIs) and community development financial institutions (CDFIs).
ICBA opposes changes that would effectively increase the taxation of estates, including taxation of capital gains at death and eliminating or curbing stepped up basis in the valuation of assets. Such changes would trigger sales of community banks and trigger industry consolidation.
ICBA continues to promote tax and budget policies that foster economic growth and support community bank customers by providing direct tax relief and encouraging private savings and small business investment. A fair and unbiased tax code will enhance the viability of community banks and the vital role they serve in the U.S. economy as a source of lending for consumers, small businesses, and farms.
The One Big Beautiful Bill Act (OBBBA) of 2025 extends permanently critical expiring provisions of the 2017 Tax Cuts and Jobs Act, including the individual rate structure with a top rate of 37 percent, the estate tax exemption of $13.6 million per person, and the 20 percent deduction for pass-through business income (Section 199A). These provisions support community lending and investment in workforce, technology, and physical infrastructure. OBBBA also created a permanent 25 percent exclusion of interest income earned on loans secured by agricultural land. This provision is based on the ACRE Act for which ICBA has long advocated. ICBA urges Congress to increase the exclusion to 100 percent to provide additional interest rate relief for struggling farmers, ranchers and rural communities.
Carefully designed tax incentives for community bank lending would lower credit costs for targeted borrowers and help community banks diversify their loan portfolios and comply with the Community Reinvestment Act. ICBA believes tax incentives should support community bank lending to low-to-middle income individuals, small businesses, and small farms. Tax relief for community bank retained earnings would strengthen community banks and allow them to better serve their communities.
Such tax relief would also narrow the tax gap between community banks and tax-exempt credit unions and Farm Credit System (FCS) lenders, many of which are multi-billion-dollar entities. These institutions have evolved into the equivalent of banks and should be taxed equivalently.
Letters & Testimonies
Community Bank-Relevant Provisions of H.R. 1
Letter to Congress about IRS regarding IVES
Comments on Captive Insurance Proposal
ICBA Expert Contacts
