Title 26 — Internal Revenue CodeRelease 119-73
§591 Deduction for Dividends Paid on Deposits
Title 26 › Subtitle Subtitle A— Income Taxes › Chapter 1— NORMAL TAXES AND SURTAXES › Subchapter H— Banking Institutions › Part II— MUTUAL SAVINGS BANKS, ETC. › § 591
Summary
Mutual savings banks, cooperative banks, savings and loan associations, and similar savings institutions can deduct the dividends or interest they pay or credit to depositors' accounts, as long as the money can be withdrawn on demand with only customary notice. A bank with share-based capital stock still counts as a mutual savings bank if it operates under mutual savings bank laws.
Full Legal Text
Title 26, §591
Internal Revenue Code — Source: USLM XML via OLRC
(a)In the case of mutual savings banks, cooperative banks, domestic building and loan associations, and other savings institutions chartered and supervised as savings and loan or similar associations under Federal or State law, there shall be allowed as deductions in computing taxable income amounts paid to, or credited to the accounts of, depositors or holders of accounts as dividends or interest on their deposits or withdrawable accounts, if such amounts paid or credited are withdrawable on demand subject only to customary notice of intention to withdraw.
(b)For purposes of this part, the term “mutual savings bank” includes any bank—
(1)which has capital stock represented by shares, and
(2)which is subject to, and operates under, Federal or State laws relating to mutual savings bank.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
1981—Pub. L. 97–34 designated existing provisions as subsec. (a), inserted heading “In general”, and added subsec. (b). 1962—Pub. L. 87–834 included other savings institutions chartered and supervised as savings and loan or similar associations under Federal or State law, and authorized amounts paid as interest as a deduction.
Statutory Notes and Related Subsidiaries
Effective Date
of 1981 Amendment Pub. L. 97–34, title II, § 246(d), Aug. 13, 1981, 95 Stat. 256, provided that: “The
Amendments
made by section 245 [amending this section and section 593 of this title] shall apply with respect to taxable years ending after the date of the enactment of this Act [Aug. 13, 1981].”
Reference
Citations & Metadata
Citation
26 U.S.C. § 591
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73