Federal lawmakers are considering tax reforms that could require credit unions to pay federal income taxes. 

While this may sound like a change at the policy level, the impact would be very real for you, the member.

If credit unions lose their federal tax-exempt status, they will have fewer resources to return to members in the form of affordable loan rates, lower fees, and more personalized support. This could result in higher costs and reduced access to affordable financial services for millions of Americans who rely on credit unions as their financial partner.

Why Credit Unions Are Tax-Exempt:

Credit unions operate differently than other corporations and large banks. They are not-for-profit, member-owned financial cooperatives that exist to serve people, not generate profits for shareholders. Their earnings are reinvested into the membership to provide benefits like lower interest rates on loans, higher yields on savings, and fewer fees.

This tax-exempt status, established under the Federal Credit Union Act of 1934, reflects credit unions’ mission to promote financial inclusion and serve their communities. This was created to recognize their unique structure and purpose. While they don’t pay federal income taxes, credit unions contribute billions each year through state and local taxes, along with community investment. Removing this exemption wouldn’t just affect institutions, it would hurt the 140 million Americans who benefit from lower-cost financial services, especially in smaller communities. 

Why Credit Unions Were Created:

Credit unions were created to give working people access to fair and affordable financial services. The first U.S. credit union opened in 1909, inspired by cooperative models in Europe. During the Great Depression, when traditional banks failed or denied service to lower-income individuals, credit unions expanded rapidly, offering financial stability when it was needed most.

The 1934 Federal Credit Union Act, signed by President Franklin D. Roosevelt, helped spread this movement nationwide. Nearly a century later, credit unions continue to prioritize people over profit, guided by that same mission.

New Laws And What They Could Mean For You:

There’s growing discussion in Washington about possibly ending the federal tax exemption for credit unions. While no law has been passed yet, we want our members to know that removing this tax exemption could seriously affect the benefits you currently enjoy. Industry experts warn it could lead to fewer financial options for consumers, higher costs, and even a negative impact on the broader economy.

YOU Have A Voice, Take Action Today! 

Now is the time to make your voice heard. A tax on your credit union is a tax on you. Credit unions nationwide are joining the “Don’t Tax My Credit Union” movement. You can take action today by clicking here to sign and send the pre-written message to your local U.S. Senators and Representatives.

Your participation is crucial. By taking action, you can help protect the benefits that make banking with credit unions so valuable.