FAQ: Preserving the Credit Union Tax Status

Congress is currently discussing tax reform, and some lawmakers are questioning the tax status of all credit unions – the bedrock of our mission to provide accessible financial services to everyone in our community, particularly those who benefit most from our people-before-profits approach. 

Why should you care?

If new taxes are imposed on credit unions, you will pay more for loans, have lower returns on savings, and pay more in fees. Additionally, without strong credit union competition in the marketplace, banks will increase fees for all consumers. 

Why are credit unions tax-exempt?

Credit unions have been exempted from federal income taxes for more than 75 years. This exemption continues because credit unions are member-owned, not-for-profit cooperatives that provide financial services to people at all economic levels and promote financial education in our communities. It's important to note that credit unions do pay property taxes, sales taxes, and payroll taxes—Congress only exempts us from federal income taxes. 

What's happening now?

As Congress works through difficult federal budget negotiations in 2025, banking industry lobbyists are once again seizing the opportunity to push for the elimination of credit unions' tax-exempt status. With federal deficit concerns continuing to dominate budget discussions, these banking groups are framing our tax exemption as a "loophole" despite the fact that it's consistent with how all not-for-profit organizations are treated. Even as many traditional banks report substantial profits in early 2025, their lobbyists continue their decades-long effort to reduce marketplace competition by targeting credit unions. If their efforts succeed and new taxes are imposed on credit unions, it would effectively mean more than 140 million credit union members nationwide would pay more through higher loan rates and increased fees, while reducing competitive pressure that benefits all consumers. 

Your voice matters.

Members of Congress need to hear directly from their constituents about why your credit union is important to you and your family. Every message strengthens our collective voice. 

Please take one minute to contact your representative using this link. 

Don't tax my credit union - it's a tax on me. The credit union tax status allows us to provide more affordable rates and fees, stronger consumer protection, financial education, and personalized service that benefits you directly. It’s important that Members of Congress share their support for credit unions with their Congressional Leadership.  

Thank you for being a member of our credit union and for helping preserve the financial cooperative that generations before us have protected.