WASHINGTON—Credit unions could see a rise in auto lending, higher salary expenses, and intensified competition from banks if the Big Beautiful Bill (H.R. 1) becomes law in its current form, according to a new analysis by America’s Credit Unions.
As CUToday.info reported, last week H.R. 1 passed the House, leaving the movement’s tax exemption in place. The bill has now moved to the Senate.
The Senate is expected to make some changes. A final bill must be reconciled and passed by both chambers before being signed into law by President Donald Trump.
ACU Chief Advocacy Officer Carrie Hunt spoke with CUToday.info about potential impacts from H.R.1. She said one of the bill’s rules that could have a big impact on CUs is the tax deduction for interest on U.S.-assembled cars.
“Credit unions are known to have amazing rates for auto loans, Hunt reminded. “Anything that will continue to increase sales is going to be a positive for credit unions.”
Turning to the bills’ rule that will exclude 25% of bank’s interest income from agricultural and rural loans from their income taxes, Hunt said that will make banks more competitive in this area.
“Credit unions have such a small percentage of this market in comparison to banks, and in part that's due to our member business lending cap. I think this might push credit unions to be more competitive in this area,” she said.
Hunt said the 3.5% remittance excise tax won’t have a huge impact on credit unions overall, but it will be felt by those that do a great deal of these transactions.
“The credit unions that do a lot of those right tend to have very specific fields of membership—serving immigrant populations,” she said. “But, as we know, this bill is really about preserving the credit union tax exemption. But anytime you have changes to the tax code, no matter what, there’s going to be some ins and outs…We'll see what the impact of this whole Big Beautiful Bill will be.
Below is ACU’s analysis of H.R.1 and its potential effects on credit unions.
1. Credit union tax status unchanged
America’s Credit Unions, league partners, credit unions, and system partners launched a unified advocacy strategy to secure credit unions’ not-for-profit tax status in the package. Language to change the tax status was never included in draft legislation.
2. ACRES Act
This allows banks to exclude 25% of their interest income from agricultural and rural loans from their income taxes.
Impact for credit unions: Banks will be more competitive in rural and agricultural real estate loans.
3. Increased deductibility of Subchapter S bank income
Under current law, an individual generally may deduct 20% of qualified business income from a partnership, S corporation, or sole proprietorship. The bill increases that threshold to 23%.
Impact for credit unions: Subchapter S community banks will be competitive by offering investors a greater tax deduction on income earned from the bank.
Excise tax on executive compensation for tax-exempt organizations
Under the Tax Cuts and Jobs Act, current law imposes an excise tax on "excess" compensation paid to certain highly compensated employees by applicable tax-exempt organizations. This was limited to the top five employees who make over $1 million annually (including annual compensation and deferred compensation payouts). The new bill applies the excise tax to all employees making over $1 million annually.
Impact for credit unions: Credit unions could face more expense in compensation for employees paid more than $1 million.
Deductibility of the interest on certain auto loans
For tax years 2025-2028, individuals can deduct up to $10,000 a year of interest on a loan for a car that was assembled in the U.S. The deduction begins to phase out for individuals whose income exceeds $100,000 ($200,000 filing jointly.)
Impact for credit unions: This could stimulate more auto lending, benefiting credit unions.
6. Elimination of Clean Vehicle Tax Credit
The bill would eliminate the tax credit for previously owned electric vehicles (EVs) and most new EVs placed in service after Dec. 31, 2025. This bill includes a special rule for taxable year 2026 that only allows EVs produced by manufacturers that have not sold greater than 200,000 new EVs between Dec. 31, 2009, and Dec. 31, 2025, to qualify for the credit.
Impact for credit unions: The elimination of EV tax credits may slow down some auto lending at credit unions, but could be offset by the auto loan interest deduction.
7. Excise tax on parking and transportation benefits
This provision amends the tax code to increase the unrelated business taxable income of a tax-exempt organization by including the amount paid or incurred for any qualified transportation fringe benefit, including parking.
Impact for credit unions: Credit unions offering parking and transportation benefits would face a greater cost for offering them.
8. Long-term savings accounts
These “Trump Accounts” can be used for education, homeownership, entrepreneurship, etc. The savings must be put into equity investments.
Impact for credit unions: Credit unions will be able to offer these accounts to members, though they may have to work through a CUSO or third-party provider to offer the product.
9. Excise tax on remittances
The bill places an excise tax of 3.5% on remittances made by non-U.S. citizens to other countries, to be collected by the entity sending the remittance.
Impact for credit unions: This could become a paperwork burden for credit unions that offer remittance services because they will have to collect and send the taxes and provide paperwork to U.S. citizens who will claim a tax credit on their annual taxes for any remittance taxes they paid.
10. Regulatory modernization and efficiency
A last-minute deal allows the Office of Management and Budget to pursue regulatory modernization and efficiency at a number of agencies, including the CFPB.
Impact for credit unions: This provision will continue to put pressure on the CFPB to reduce regulatory burdens.
11. “No Tax on Overtime”
Sec. 110102 includes a “no tax on overtime” provision that allows a deduction in an amount equal to the qualified overtime compensation received during a tax year. Notably, this provision will require employers to include the total amount of qualified overtime compensation in a W-2.
Impact for credit unions: As a pure administrative function, this shouldn’t be a huge burden, but it will change payroll processing and withholding, per Sec. 110102(f).
12. Federal student loans
The bill will sunset economic hardship and unemployment deferments for borrowerswho receive federal student loans on or after July 1, 2025. It also reduces the totalperiod a borrower may be eligible for forbearance.
Impact for credit unions: This provision could impact repayment of other debts owed tocredit unions.