Credit unions in US defend income tax exemption

NEW YORK, February 18, 2025 — Credit Unions in the United States of America [U.S.A] have launched a campaign explaining how they are different from commercial banks so that they can be able to continue protecting their income tax exemption.

Launched last month by America’s Credit Unions, the federal credit union apex, the campaign sends a clear message: ‘’Don’t Tax My Credit Union’’.

It comes in response to an advert by the American Bankers Association last year, which questioned the tax exemption for credit unions . The banks in the country aver that credit unions are a US$ 1 trillion industry that pays no income tax, claiming this amounted to “outdated special treatment.”

With the US House and Senate making broad-based tax reform a major priority, the credit union sector is trying to raise awareness about its distinct business model. The Internal Revenue Service specified that credit unions “must be formed and operated. under a state credit union law, without capital stock and have state defined characteristics, operate without a profit and for the mutual benefit of its members”.

As part of its campaign, America’s Credit Unions has launched digital ads to raise consumer awareness and show policymakers how taxing credit unions would hurt Main Street communities and the more than 140 million credit union members nationwide.

“In an economy that leaves us behind, Wall Street banks want to start taxing not-for-profit credit unions. That’s a new tax on 140 million Americans,” says one of the promotional videos released by the apex.

According to its estimations by the Joint Committee on Taxation, the annual cost of the credit union tax status of US$ 2.8 billion delivered an approximate 1,300 percent return on investment, with $35.9bn in member and non-member benefits for the year ending June 2024. While they are exempt from income tax, credit unions pay other state and federal taxes in 2023 amounting to UA$ 23 billion  in federal taxes in 2023, along with US$ 13 billion in state and local taxes.

The ads target the congressional districts and states represented by key tax-writing committee members.

Local credit union apexes and leagues in Pennsylvania and Montana have also met with legislators representing their states to urge their support in preserving the credit union federal income tax status.

The House Ways and Means Committee has held two tax reform hearings. A report of potential government spending reductions included revoking the credit union tax status as an option to counter tax cuts.

The House Ways and Means Committee has already conducted two tax reform hearings in Congress, and a report of potential government spending reductions included revoking the credit union tax status as an option to counter tax cuts.

A recent budget resolution by the House Budget Committee specifying large reductions in taxes and spending over the next decade, mentions the credit union income tax exemption as one of the “tax preferences that deserve scrutiny and reform”.

America’s Credit Unions urges the US Congress to “oppose any new taxes on credit unions and to preserve and protect the credit union status.”

https://thecooperator.news/woccu-president-advocates-for-credit-unions-in-visit-to-ukraine/