Credit Union Tax Exemption

Our Position

Preserving the credit union tax exemption continues to be our top priority. Congress passed the TCJA 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. As the Biden administration continues to consider tax changes to finance its infrastructure proposal and other spending priorities, NAFCU will keep fighting to maintain the credit union tax exemption.

Taxing credit unions would result in undesirable outcomes for credit union members, including:

  • Credit unions would lose their identity: By losing their not-for-profit, cooperative structure, credit unions would be forced to focus on increasing profits instead of their member-owners;
  • Worse rates and higher fees: If the tax exemption is repealed, it would adversely impact savings, increase borrowing rates and raise fees for millions of Americans;
  • Less access to capital: Further limitations on the ability to raise capital would potentially impact safety and soundness; and
  • Erosion of the volunteer base: If credit unions become "more like banks," the self-help, volunteer characteristic of credit unions, and the community as a whole, would become less distinct.

Taxing credit unions would also result in undesirable outcomes for the economy at large. According to this 2021 NAFCU-commissioned independent study, these negative impacts would include:

  • A $120 billion reduction in GDP and $56 billion less income tax revenue for the federal government over the next 10 years;
  • Nearly 80,000 jobs lost per year over the course of the next decade; and
  • Higher rates for bank customers due to less competition from credit unions – a 50 percent reduction in the credit union market share would cost bank customers an estimated $6.8 billion to $9.9 billion per year in higher loan rates and lower deposit rates.