NASHVILLE—The Independent Community Bankers of America (ICBA) has formally announced its new policy toward targeting the credit union tax exemption.
Introduced at this week’s ICBA LIVE 2025 national convention here, the policy calls on lawmakers to end the federal tax exemption for credit unions with $1 billion or more in assets, or to establish tax parity between credit unions and tax-paying community banks.
CUToday.info previously reported that ICBA President and CEO Rebeca Romero Rainey had this policy in her sights when she testified before Congress earlier this year.
“With credit union acquisitions of tax-paying community banks reaching a record high last year, the growing skepticism of credit unions’ tax and regulatory exemptions must evolve into policymaker action,” Romero Rainey said. “Eliminating the federal tax exemption for credit unions over $1 billion in assets will help ensure taxpayer dollars no longer tilt the competitive marketplace, subsidize community banking consolidation, and result in fewer choices for consumers and small businesses.”
ICBA asserted that the new policy comes as “policymakers increasingly scrutinize credit union acquisitions of community banks, such as the FDIC last year advancing a statement of policy on bank mergers that for the first time explicitly stated that additional scrutiny may be needed for deals involving credit unions.”
“Meanwhile, consumers increasingly support reforms to credit union policies, with recent ICBA polling conducted by Morning Consult finding that 62% of U.S. adults say credit unions that operate like banks should have to pay taxes like banks and 62% support a congressional investigation of the credit union industry’s tax and regulatory exemptions,” ICBA said.
Washington Credit Union Advocate John McKechnie said ICBA’s policy is really nothing new.
“Contrary to how ICBA is attempting to frame this, it seems like they’re just pouring old wine into new skins,” McKechnie said. “Bank lobbyists have been shopping the idea of dividing credit unions by asset size for some time now, which seems to miss the point about credit union structure and service to consumers. I would expect that the banks translate this into a legislative proposal in the coming days or weeks, especially given the drafting of a tax reform bill seems pretty imminent.”
Defense Credit Union Council Chief Advocacy Officer Jason Stverak agreed with McKechnie.
“This is just more of the same-old tired attacks on credit unions by the bank lobby,” Stverak said. “While they complain about the tax status of credit unions they conveniently overlook how banks use Subchapter S filings and depreciation to pay no taxes. Credit unions use their tax status to invest in their members and in their communities with high interest rates and lower loan rates. These worn-out attacks by the banks will not deter credit unions from living up to our mission to serve people over profits.”
America’s Credit Unions Chief Advocacy Officer Carrie Hunt emphasized, “Credit unions at their core share the same mission – a cooperative financial institution to meet the needs of their fields of membership and communities. Regardless of their size, credit unions meet their members where they are and work to uplift them, whether that's through a new service, type of loan, or initiative. The industry’s tax status provided $234.6 billion in total benefits to American consumers over the last 10 years – more than $23 billion a year. A new tax on any credit union would be a tax on their members. ICBA’s new policy shows they are grasping at straws when credit unions step in and reinvest in their communities which banks have left behind.”