This year, credit union leaders face a pivotal moment—one that could shape the future of our industry for decades to come. The scheduled expiration of key provisions from the 2017 Tax Cuts and Jobs Act has reignited debates about tax policy, government revenue, and financial institution fairness. Once again, credit unions may find themselves defending their federal tax exemption.
This is not just an industry concern—it’s a member concern. The credit union tax exemption isn’t about credit unions themselves; it’s about the millions of people, families, and small businesses we serve. It enables credit unions to offer better rates, lower fees, and financial services to those who need them most. In an era of economic uncertainty, skyrocketing housing costs, and rising consumer debt, the not-for-profit credit union model is more essential than ever.
The tax exemption: A return on investment for communities
Critics of the credit union tax exemption argue that it provides an unfair advantage. But that argument ignores a fundamental truth: Credit unions are not-for-profit financial cooperatives, not shareholder-driven corporations. Every dollar that would otherwise be paid in federal income tax is reinvested into members and communities. That reinvestment comes in the form of:
- Better rates and lower fees: Credit unions save members billions each year in lower loan rates, higher savings yields, and fewer fees compared to for-profit banks.
- Expanded access to financial services: Many credit unions serve underbanked and underserved communities, offering fair and affordable financial products to those who might otherwise turn to high-cost payday lenders.
- Small business and homeownership support: Credit unions play a critical role in providing loans to small businesses and first-time homebuyers who may struggle to secure funding elsewhere.
The National Credit Union Administration (NCUA) has consistently reported that credit unions serve a higher proportion of low-income and underserved consumers compared to banks. If Congress were to remove the tax exemption, the consequences would be felt not only by credit unions themselves, but also by the members and communities that rely on them.
America’s Credit Unions’ “Don't Tax My Credit Union” campaign
As tax discussions intensify in Washington, America’s Credit Unions have revitalized the “Don't Tax My Credit Union” campaign to ensure policymakers understand what is at stake. The campaign underscores a fundamental truth: taxing credit unions would directly harm their 140 million members by reducing access to affordable loans and lower fees.
The campaign is using digital ads and grassroots advocacy efforts to highlight the consequences of eliminating the tax exemption. Key messages include:
- Credit unions return billions to their members through better rates and lower fees—a direct result of their tax-exempt status.
- Removing the tax exemption would disproportionately harm underserved communities, many of whom rely on credit unions as their primary financial institution.
- Unlike banks, credit unions are member-owned, meaning their primary obligation is to their members, not shareholders.
By advocating for regulatory efficiency and mobilizing support to preserve their tax status, credit union leaders can ensure that credit unions remain a vital resource for underserved communities, exemplifying the “credit union difference” in action. America’s Credit Unions members may leverage the following resources to amplify their messaging.
The role of credit union leaders: Telling our story
Credit union leaders cannot afford to be passive in this debate. We must proactively educate lawmakers, members, and the public about why the credit union model is different—and why it must be preserved. That means:
- Engaging in advocacy: Now is the time to strengthen relationships with legislators, ensuring they understand the economic value credit unions provide. In fact, the Cornerstone League and America’s Credit Unions teams recently met with House Ways & Means Committee Chairman Jason Smith to drive home the importance of the tax exemption.
- Empowering members to speak up: Members are our greatest advocates. If they understand the benefits of credit union membership, they can amplify our message.
- Highlighting real-world impact: Credit unions must share stories of how they’ve helped members achieve financial security, purchase homes, and grow businesses.
- Collaborating across the movement: State leagues, America’s Credit Unions, and credit unions of all sizes must work together to ensure a unified, compelling message reaches policymakers.
A call to action
The coming year will be critical in determining whether credit unions can continue to operate under the not-for-profit model that has served communities for more than a century. It is up to credit union leaders to make sure that message is heard loud and clear. If we don’t tell our story, someone else will—and we can’t afford to let them get it wrong.
By standing together and reinforcing the “credit union difference,” we can ensure that credit unions remain a vital force in financial services for generations to come. With the advocacy efforts of America’s Credit Unions and strong leadership engagement, we can protect the tax status that allows credit unions to serve their members and communities most effectively.
Now is the time to act—to educate, advocate, and make the case for why credit unions matter more than ever.
