November 02, 2017

CU tax exemption safe; remains NAFCU top priority

House Republican leaders on Thursday introduced their tax reform bill, which, as urged by NAFCU, leaves the credit union tax exemption intact. NAFCU is examining the bill for any additional impacts on credit unions.

"NAFCU thanks House Republican leaders for continuing to recognize the economic value the credit union tax exemption provides to the U.S. economy and American consumers," said NAFCU President and CEO Dan Berger. "We're staying in close contact with lawmakers in both the House and Senate – especially those on the House Ways and Means Committee and Senate Finance Committee – to ensure the preservation of credit unions' tax exemption and to look out for credit union interests as this process continues to unfold."

The House Ways and Means Committee is scheduled to mark up the bill, the Tax Cuts and Jobs Act (H.R. 1), next week.

The bill 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. The association is encouraging credit unions to remain engaged throughout this process by staying in contact with their legislators to remind them of the value of the credit union tax exemption.