WASHINGTON—The credit union tax break is now “on the menu” of items being considered to support the budget reconciliation bill, and analysts are saying that requires the industry to do even more this year to protect the movement’s tax-exempt status.
As CUToday.info reported, a document is being circulated among House Republican members that identifies numerous ways the Trump Administration can find money to support the budget reconciliation bill—and the credit union tax exemption is on the paper.
Washington credit union advocate John McKechnie said the credit union tax fight for 2025 is starting to come into focus.
John McKechnie
“There have been plenty of smoke signals from Capitol Hill that our exemption would at least be looked at, and this document seems to validate that,” McKechnie said, referring to the GOP document CUToday.info has obtained. “The next phases of this process, where Congress and the Administration actually draft and pass a budget reconciliation bill, will obviously be the most critical. And that means credit unions should do everything possible to get their message heard by lawmakers in the coming weeks and months."
DCUC Takes Action
As CUToday.info reported, after learning CUToday.info obtained a copy the GOP document, the Defense Credit Union Council moved first to send a letter to House leaders outlining why the CU tax status should not be changed.
America’s Credit Unions, as well, has launched a digital ad campaign targeting key members of Congress in an effort to further defend the credit union tax status.
Jason Stverak
Defense Credit Union Council Chief Advocacy Officer Jason Stverak told CUToday.info that anytime the credit union tax status is mentioned as being on the table for discussion, his trade organization is going to make sure credit union voices are heard.
Greg Mesack
“We're not afraid to advocate on behalf of all our members, and all credit unions, so that members of Congress have the full set of facts as they are making these tax-related decisions,” Stverak said. “Eliminating the credit unions tax status would be devastating to Main Street America, underserved communities, and defense communities across the country. We will make sure that every office hears from credit unions on this issue.”
ACU SVP of Advocacy Greg Mesack said the document obtained by CUToday.info makes a clear point.
“If we're on the menu then we are absolutely concerned,” said Mesack about ACU’s perspective. “And to say it another way, if we were not concerned, we would not be doing all this advocacy work. We would not be flying in credit union leaders to talk with their members of Congress. We've been concerned since last year…When we started looking at the landscape, talking to members of Congress, talking to Republicans…We knew this was going to be a tough slog.”
Dennis Dollar
Tax Status Won’t Change
Former NCUA Chairman Dennis Dollar acknowledged the threat, but said he believes the movement will preserve its tax exemption.
“There is always a threat to the credit union tax exemption whenever any tax bill is under consideration in Congress. But the political reality is that taxing credit unions will only generate about $2 billion a year and could potentially anger up to 140 million credit union members—who are voters—nationwide,” the Dollar Associates principal partner said. “With the potential of up to a trillion-dollar-size of tax changes being discussed, it would seem to me that the political calculus is not very favorable for an elected Congress to try to make up almost a trillion in taxes by running the risk of generating a grassroots opposition of millions and millions of credit union members. It’s like trying to empty a lake with a Dasani bottle.”
Dollar emphasized there is not enough return for the political cost of eliminating credit unions’ tax break.
“Credit unions and their trade groups will need to be vigilant in making that case,” Dollar said. “Credit unions have a good case from a philosophical argument about the not-for-profit credit union structure, a practical argument about the impact of credit unions on the economy and a political argument on the minimal amount of taxes that would be raised in return for potentially angering 140 million credit union members and voters.”