WASHINGTON—While no changes to credit unions' federal tax exemption were proposed in the Republicans' latest tax reform framework released today, NAFCU and CUNA said they will continue to tout the importance of the exemption to CUs and the economy as Congress begins its work on this issue.
"The economic value the credit union tax exemption provides to the entire economy is estimated at more than $16 billion per year, and we are pleased to see that appears to be recognized in this framework," said NAFCU President and CEO Dan Berger. "On a daily basis, NAFCU is reminding leaders in Congress and the Trump administration of the benefits that credit unions provide to the nation's consumers and economy as a whole because of the tax exemption."
“The presence of not-for-profit, member-owned financial cooperatives brings numerous benefits to both members and consumers as a whole, and CUNA, leagues and credit unions are prepared to vigorously defend it, should the need arise,” said CUNA President/CEO Jim Nussle. “As the administration and Congress continue their work on tax reform, CUNA will continue its engagement to protect the credit union tax status and ensure policymakers are aware of the credit union difference as committees and staff work to add more detail to the framework.”
The Trump administration, the House Ways and Means Committee and the Senate Finance Committee worked together on this framework. It proposes changing tax rates for individuals and businesses, including doubling the standard deduction for personal income tax filing.
NAFCU emphasized that one of its key tenets for a strong credit union industry is creating the best environment for credit unions to grow, including a fair playing field.
NAFCU said it is reviewing the tax framework and will be engaging Congress on any potential impact the plan would have on credit unions, not only regarding the tax exemption, but other changes to the tax code. One of the changes proposed would set the maximum tax rate for income from S corporations at 25%. Nearly one-third of all banks are S corporations and could benefit from this provision, NAFCU noted.
NAFCU said it is also guarding against any potential changes to the unrelated business income tax (UBIT) and the mortgage-interest deduction that could impact the industry.