Maintaining the credit union tax exemption is essential not only for credit unions and their members but for our nation's economy.
Preserving the credit union tax exemption continues to be our top priority. Congress passed the "Tax Cuts and Jobs Act" on December 20, 2017, and President Trump officially signed it into law on December 22. Thanks to NAFCU's persistent advocacy, this monumental piece of legislation keeps the credit union tax exemption fully intact. This is a testament to the value and strength of credit unions. Nonetheless, we remain focused on fighting any future attempts to tax credit unions because our country cannot afford the negative impacts of slashing and burning the credit union tax exemption.
In 2017, NAFCU commissioned an independent studyto examine the benefits of the credit union federal income tax exemption to consumers, businesses and the U.S. economy. It was found that removing the credit union tax exemption would lead to a $142 billion reduction in GDP, cost the federal government $38 billion in lost income tax revenue and cut nearly 900,000 American jobs over the next 10 years.
Add to Calendar2017-01-12 00:00:002017-01-12 00:00:00Credit Union Federal Tax Exemption Study
Benefits of the Credit Union Federal Tax Exemption
With the debate about comprehensive tax reform heating up in Washington, NAFCU commissioned a comprehensive study to take a look at the benefits of the credit union federal income tax exemption to consumers, businesses and the U.S. economy. Use the data in our study to strengthen your argument when talking to members of Congress and opinion leaders about tax reform.
Download 2017 Key FindingsA convenient two-page document to print and share with your elected officials.
Download 2017 Full Study
The 1934 Federal Credit Union Act (FCUA) states that credit unions receive a federal income tax exemption because "credit unions are mutual or cooperative organizations operated entirely by and for their members." In 1998, as part of the findings of the Credit Union Membership Access Act (P.L. 105-219), Congress reaffirmed that exemption. Still, credit unions do pay many taxes and fees, including payroll and property taxes. It is also important to note that share dividends paid to credit union members are taxed at the membership level. Critics argue that credit unions today are no different than banks.
However, the defining characteristics of a credit union, no matter what the size, remain the same today as they did in 1934—credit unions are not-for-profit cooperatives that serve defined fields of membership, generally have volunteer boards of directors and cannot issue capital stock. Credit unions are restricted in where they can invest their members' deposits and are subject to stringent capital requirements. A credit union's shareholders are its members and each member has one vote, regardless of the amount on deposit, while a bank has stockholders.
View the full issue summary
Add to Calendar2017-12-27 12:00:002017-12-27 12:00:00Tax Reform Key Changes
NAFCU and our members thank Senate Finance Committee Chairman Orrin Hatch, R-Utah, House Ways and Means Committee Chairman Kevin Brady, R-Texas, and every other member of Congress who had a hand in crafting this “Tax Cuts and Jobs Act” for recognizing the benefits of credit unions' tax exemption. NAFCU continues to analyze the bill for any potential short- and long-term impacts to credit unions.