WASHINGTON, D.C (June 4, 2025) |
As Congress begins deliberations on the upcoming budget reconciliation and tax bills, the Defense Credit Union Council (DCUC) is calling on the Senate Finance Committee to protect the long-standing federal tax exemption for credit unions—an exemption that enables affordable financial access for over 140 million Americans, including more than 40 million service members, veterans, and their families.
“Since the Federal Credit Union Act of 1934, credit unions have been exempt from federal income tax, not because of size or scope, but because of structure and purpose. Unlike banks, credit unions do not have shareholders. Every dollar of earnings is returned to members in the form of lower interest rates on loans, higher returns on savings, and reduced fees. Congress has reaffirmed this tax treatment multiple times, most notably through the Credit Union Membership Access Act of 1998, which codified into law the rationale that credit unions provide an essential public service and operate on a fundamentally different model than for-profit financial institutions.”
In Monday’s letter to Senate Finance Committee Chairman Mike Crapo and Ranking Member Ron Wyden, DCUC Chief Advocacy Officer Jason Stverak spoke to the unique and vital role credit unions have in providing financial services to America’s communities—especially for those in the military community.
The letter also highlighted how eliminating the tax exemption would ultimately amount to a tax hike on working and middle-class Americans, citing a study by the American Consumer Institute showing that credit unions return $10 to $16 in direct consumer benefits for every $1 in foregone federal tax revenue.
Additionally, DCUC points to the devastating precedent set in Australia following the removal of tax exemptions for credit unions in the 1990s, which led to a dramatic decline in the number of credit unions and diminished access to affordable financial services.
“Some may argue credit unions have outgrown their tax exemption—that’s simply not true,” says Stverak. “Our structure has not changed. What has changed is the financial landscape, and credit unions continue to serve as an indispensable alternative to for-profit banks, especially in underserved and military communities. Congress must recognize that taxing us would mean taking more from the very people we exist to help.”
In their letter, DCUC calls for continued bipartisan support of the credit union tax exemption, especially as some proposals seek to use budget reconciliation to introduce revenue-raising mechanisms that could jeopardize credit unions’ capacity to serve.
DCUC has requested meetings with Senate Finance Committee members and stands ready to bring credit union leaders from across the country to Washington to share firsthand the impact of their institutions on constituents' financial well-being.