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Title 26 — Internal Revenue CodeRelease 119-73not60

§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

Last updated Apr 5, 2026|Official source

Summary

Allows certain savings institutions — like mutual savings banks, cooperative banks, and building-and-loan type associations that are chartered or supervised by federal or state law — to deduct from their taxable income the amounts they pay or credit to depositors as interest or dividends on deposit or withdrawable accounts, if those amounts can be taken out on demand except for the normal notice a depositor must give. The term "mutual savings bank" here means any bank that (1) has capital stock made up of shares, and (2) operates under federal or state 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 5, 2026

Release point: 119-73not60