WASHINGTON — Credit unions have emerged victorious in their long-running tax battle, as Congress finalized H.R. 1 Thursday afternoon—legislation that preserves their tax-exempt status.
The bill, a reconciliation of the Senate and House versions, now heads to President Trump for signature.
Just over a day before the final draft was completed, industry analysts voiced concerns that credit unions’ tax exemption could be on the chopping block as part of a last-minute budget deal. However, those fears eased by Wednesday as the Trump Administration pushed lawmakers to finalize the bill before the July 4 deadline.
However, as recently as Tuesday, the timeline appeared uncertain. Key differences remained between the House and Senate versions of H.R. 1, and Senate Majority Whip John Thune (R-SD) was still working to secure enough votes for passage.
H.R.1 would have been passed Thursday morning had not House Minority Leader Hakeem Jeffries (R-NY) used the unlimited speaking time afforded to party leaders to delay passage, speaking for nearly nine hours.
“This is a significant victory for our industry and the millions of members we serve—especially our nation’s military families and veterans,” said Defense Credit Union Council President and CEO Anthony Hernandez.
The final bill contains no reference to “credit unions” or “federal credit unions,” nor does it propose any changes to the Internal Revenue Code that would impact our tax status, Hernandez confirmed.
Jim Nussle, America’s Credit Unions president/CEO, thanked the U.S. Senate and House of Representatives for "recognizing the immense value credit unions provide to communities all across the country by securing the credit union tax status. This is a major victory for the 142 million Americans who rely on credit unions, small businesses, and the credit union industry as this bill allows these community-first institutions to continue serving Main Street America. We thank our credit union champions in Congress, as well as the dedication of our state leagues and credit union members who contributed messages, letters, opinion pieces, and most importantly their time, to emphasize the credit union difference. America’s Credit Unions will continue to advocate for stronger American communities and financial resources that help consumers reach their American Dream.”
DCUC Actions
DCUC emphasized that preserving the credit union tax exemption is crucial to its ongoing mission of supporting defense community financial readiness.
DCUC emphasized that for over 80 years, defense credit unions have operated on military installations worldwide, providing affordable financial services and trusted guidance to servicemembers, veterans, and their families. These member-owned, not-for-profit institutions fill gaps where for-profit banks often will not – from offering branches on base to tailored programs for deployed troops.
"As DCUC has cautioned lawmakers, taxing credit unions would be a direct hit on the financial readiness of our nation’s military. By maintaining credit unions’ tax-exempt status, Congress has upheld a policy that allows defense credit unions to reinvest earnings into better rates, lower fees, and community support programs instead of paying federal income taxes. This outcome ensures that America’s 142 million credit union members – including millions of servicemembers – will continue to enjoy the benefits of member-focused financial services without new costs," said DCUC Chief Advocacy Officer Jason Stverak.“Nowhere in this final bill is there any reference to ‘credit unions’ or any provision that affects our tax status."
“We urged lawmakers to stand strong against misguided proposals that would have hurt military families, and we’re incredibly grateful that our collective voice was heard," Stverak said.
Stverak noted that DCUC mobilized early and tirelessly to safeguard the credit union exemption."Over the past year, DCUC led a proactive advocacy campaign – submitting more than 30 letters and joining multiple industry coalitions – to educate Congress and counter any move to erode credit unions’ tax status.
“From day one, DCUC has been vigilant in defending the credit union tax exemption, and this final result validates the importance of those efforts,” he added. "DCUC’s leadership worked closely with other credit union industry partners to ensure H.R. 1 remained free of any provisions that might undermine credit unions’ ability to serve their members."
ACU Actions
ACU pointed out that through its Don't Tax My Credit Union campaign, which began laying the groundwork with lawmakers during swearing-in events in January, America's Credit Unions, leagues, and credit unions have:
- Met with Senate Finance Committee Chairman Mike Crapo and Republican committee members;
- Met with every Republican member of the House Ways & Means Committee, including Chairman Jason Smith several times;
- Met with the White House National Economic Council, Office of Management and Budget, and Treasury Department (6x);
-
Met with Senate Majority Leader John Thune, Speaker of the House Mike Johnson, House Majority Leader Steve Scalise, House Financial Services Committee Chairman French Hill;
Contacted all 535 Congressional offices with key data on the credit union difference; - Generated more than 861,000 grassroots letters directly to lawmakers; and
- Launched digital ad campaign targeting key tax writers and congressional leaders that has generated over 139 million ad impressions and engaged over 191,000 activists.