Political Affairs
Adam Engelman
Kristen Prather

Tax Status

Congress has provided the credit union federal tax-exemption because of the not-for-profit, cooperative structure of credit unions, and the special mission credit unions have to serve consumers. The credit union tax status is not based on the size of credit unions or the products and services that they offer; it is based on the credit union structure. This rationale for the tax-exempt status has been ratified several times by Congress.

There is no hiding the fact that the Federal government faces a significant budget crisis. A Presidential Commission recently recommended eliminating all tax expenditures. The credit union tax status benefits all consumers – credit union members and those who are not credit union members. While the credit union tax expenditure “costs” the federal government approximately $500 million annually, consumers benefit to the tune of $7 billion - $8 billion annually because credit unions are tax-exempt.

Credit union competition helps keep bank and savings and loan prices lower. For example, credit unions offering credit cards now charge lower interest rates than most other lenders (on average by two or three percentage points). Imagine how expensive other lenders would make credit cards, or auto loans, if credit union competition did not exist! But that is exactly what would happen if credit unions are taxed.

Grassroots Action Needed:
Credit union advocates should continue to defend that status by educating Members of Congress about why credit unions are tax exempt and the benefits of this status to the community. Please use the talking points and handouts below to educate Members of Congress and their staff.

Taxation Toolkit

Support Material

Credit Union Value Proposition Talking Points
Straight to the Point: Credit Unions are the Best Option For Consumers to Conduct Their Financial Services
State-by-State Data on the Benefits of Credit Union Membership
CU vs. Bank Comparisons
Letter from Bill Cheney to the members of the President's Economic Recovery Advisory Board (09/01/10)
Letter from Bill Cheney to Treasury Secretary Timothy Geithner responding to a letter sent by the Independent Community Bankers of America (10/07/10)
Letter from NCUA Chairman Debbie Matz to Bill Cheney Regarding the Credit Union Tax Status (11/29/10)
Letter Regarding Hearing on "Public Charity Organizational Issues, Unrelated Business Income Tax, and the Revised Form 990 (8/03/12)

Right Promo- Membership