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November 03, 2017

NAFCU touts benefits of CU tax exemption ahead of bill review today

The credit union tax exemption remains safe as House Ways and Means Committee Chairman Kevin Brady, R-Texas, on Friday released the chairman's mark of the bill, which will be the text used when the committee begins reviewing the legislation today during mark-up.

NAFCU President and CEO Dan Berger thanked Brady for his support of credit unions and urged him to oppose any efforts to amend the bill that would change credit unions' tax status in a letter ahead of today's mark-up.

"As you are aware, credit unions provide great economic benefit to the nation's economy," Berger wrote. "Credit unions are a vital part of the financial services industry and provide their nearly 110 million members financial opportunities they may not otherwise have access to."

Berger pointed to an independent tax study released by NAFCU earlier this year that shows the cumulative benefit credit unions provide the greater economy totals $16 billion a year. "We urge you to continue to protect the credit union tax exemption as H.R. 1 works its way through the legislative process," Berger added.

In a statement Friday on Brady's mark of the bill, Berger thanked him for recognizing the important role credit unions play in the financial marketplace.

"We thank Chairman Brady and all the members of Congress who understand the value the credit union tax exemption provides to the U.S. economy and consumers," said Berger. "We will remain engaged with the Ways and Means Committee as they mark up the bill next week. NAFCU is staying in close contact with members in both the House and Senate to ensure preservation of credit unions' tax exemption as Congress begins its work on tax reform."

The tax bill, the Tax Cuts and Jobs Act (H.R. 1), released last week, preserves the mortgage-interest deduction with a cap of $500,000 for newly purchased homes (grandfathering in existing homes), maintains state and local property tax deductions up to $10,000 and keeps the 401(k) retirement account intact. NAFCU is reviewing the bill for any potential changes to the unrelated business income tax (UBIT). The bill does propose making tax changes to executive compensation at tax-exempt organizations. It also proposes some Subchapter S tax relief, although it would fully eliminate the tax deduction for FDIC premiums for institutions with more than $50 billion in assets.

NAFCU is advocating five tenets for ensuring a positive environment for credit unions, and one of these is a fair playing field. NAFCU is continuing to examine this tax bill and will be engaging Congress on any potential impact this legislation would have on credit unions – not only with respect to the tax exemption, but other tax code provisions as well. Preserving credit unions' tax exemption remains NAFCU's top legislative priority.