Over $16 billion in economic benefits, credit unions underscore value of not-for-profit tax status

CUNA releases white paper detailing merits of credit union tax exemption

WASHINGTON, DC (April 9, 2019) — America’s credit unions provided about $16.5 billion in financial benefit in 2018 to the U.S. economy, according to a white paper published today by the Credit Union National Association (CUNA). The in-depth analysis explains how credit unions have contributed nearly $142 billion back into the economy since 2007 and why maintaining the credit union tax status is critically important to the survival of the nation’s nearly 5,500 credit unions and their 115 million members.

According to the study, credit unions provide substantial benefits to their members through higher savings yields, lower interest rates and fewer fees. Furthermore, this competitive pressure helps keep traditional for-profit financial institutions in-check, CUNA posits, benefiting all consumers across the country.

“With a nearly eightfold return on investment, the exemption from federal income taxes that Congress has granted credit unions continues to be one of the most significant investments that the government makes in the American people every year,” said Mike Schenk, CUNA Chief Economist and Deputy Chief Advocacy Officer for Policy Analysis.

Credit unions are able to return these benefits to their members and non-members alike because of their not-for-profit mission and structure. Unlike other financial institutions, credit unions are set up to provide profits back to member owners-rather than investors. This is what earned credit unions their federal income tax exemption.

Repealing this exemption and taxing credit unions would not only curtail their ability to provide this economic support, but it would also provide minimal benefit to the U. S. Treasury. According to the white paper, the taxes that credit unions would pay under a repeal of the exemption would fund federal government operations for just four hours. This amount, $1.8 billion, is a far cry from the $30 billion in taxes that banks avoid paying in 2018 under the Tax Cuts and Jobs Act.

Furthermore, the study points out that credit unions pay several federal and state taxes. CUNA estimates that in 2017 credit unions generated approximately $12.2 billion in federal taxes and $7.4 billion in state taxes.

Additionally, credit union members pay personal income tax on both the proceeds distributed by credit unions and the interest the members earn. Credit unions members paid an estimated $1.5 trillion in state and federal taxes in the most recent tax year.

Changing the credit union tax status would lead to many larger credit unions likely converting charters to operate as banks, while many smaller credit unions would likely be forced to merge or go out of business.

Read the white paper in full here.

Top highlights include:

  • Credit unions are exempt from federal income tax because of their unique structure as not-for-profit financial cooperatives that return proceeds to member-owners through fewer fees, reduced interest rates and higher savings yields.
  • Credit unions delivered an estimated $16.5 billion in direct and indirect financial benefits 2018 — an amount that is roughly eight times larger than the tax exemption Congress has granted credit unions ($1.8 billion in 2018).
  • Credit unions pay a wide variety of federal, state, and local taxes such as employer taxes, excise taxes, and property taxes. Collectively, nearly $20 billion in taxes annually.
  • Imposing new taxes on credit unions would threaten the provision of the benefits they provide members and nonmembers. Ultimately, it would mean trading off small gains in tax revenue for increased risk in credit unions and a reduction in consumers’ financial choices.
  • Additionally, the 115 million credit union members pay personal income tax on both the proceeds distributed by credit unions and the interest the members earn. Indeed, credit unions members paid an estimated $1.5 trillion in state and federal taxes in the most recent tax year.
  • The value of the credit union tax expenditure pales in comparison to the tax reductions enjoyed by commercial banks via the Tax Cuts and Jobs Act.  For example, while the credit union tax expenditure was approximately $1.8 billion in 2018, lower tax rates have reduced the tax burden on U.S. banks by nearly $30 billion and the reduction of the top rate to 21% is a permanent fixture of the 2017 tax law changes.

About CUNA

Credit Union National Association (CUNA) is the only national association that advocates on behalf of all of America’s credit unions, which are owned by 135 million consumer members. CUNA, along with its network of affiliated state credit union leagues, delivers unwavering advocacy, continuous professional growth and operational confidence to protect the best interests of all credit unions. For more information about CUNA, visit To find your nearest credit union, visit


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