Starting with 2026 year-end financial statements, banks must share more detail about the taxes they pay — and C corporation banks will feel the biggest change.
Beginning with Dec. 31, 2026, year-end financial statements, many community banks will need to provide more detailed income tax disclosures.
Accounting Standards Update 2023-09 from the Financial Accounting Standards Board takes effect for private companies for annual periods beginning after Dec. 15, 2025, which means calendar-year banks will see the change in this year’s financial statements.
What does this mean for community banks?
If your bank has a financial statement audit, or full disclosure financial statements prepared for any reason, the update requires more detail related to taxes paid and tax footnotes.
How much work this creates depends largely on your bank’s structure. For S-Corp community banks, the impact should be minimal, since most have little income tax activity unless they owe state-level tax. For C-Corporation banks, the impact is much greater.
Key disclosures required under the update include:
- Total income taxes paid
- Broken out by federal, state, and any foreign jurisdictions
- Any individual jurisdiction where taxes paid exceed 5% of total taxes paid
- Effective tax rate reconciliation
- Qualitative disclosures that explain differences between the statutory and effective tax rates.
- Examples include bank-owned life insurance income, tax credits, tax-exempt municipal bond interest, etc.
- Qualitative disclosures that explain differences between the statutory and effective tax rates.
How to prepare
Don’t wait for year-end close to start. Confirm your bank can track taxes paid by jurisdiction and identify the items that drive the gap between your statutory and effective tax rates now, so the new disclosures don’t slow down your audit.
If you have questions about how these changes affect your bank, reach out to a Pinion advisor.
