Mutual banks are a type of community bank that are owned by their depositors. They are unlike other types of banks which are owned by their investors, or credit unions which are owned by their members. Funding for these institutions is limited to their own depositors, interest earned on securities, like bonds, and money they borrow money from the Federal Reserve Bank or Federal Home Loan Bank, or another banker’s bank.
 
Pennsylvania is home to nearly 60 savings banks, savings and loan associations, and building and loan associations, known as “mutual thrift institutions,” that pay their business income tax via the Mutual Thrift Institutions Tax (MTIT). The MTIT tax rate is currently set at 11.5% and applies to the institution’s total of net earnings received or accrued from all sources during the tax year. 
 
To support our local mutual thrift institutions and the local communities in which they operate, we are proposing legislation that will provide an immediate drop in the MTIT tax rate to 8.99% and then a scaled reduction every January 1 until it reaches reach 4.99%, the same tax rate enacted for the CNIT in Act 53 of 2022. Our proposal will also expand the net operating loss look-back period from three years to a more appropriate ten years.
 
Please join us in supporting this proposal to provide more equitable taxation to our local mutual banks.