By Ray Birch
WASHINGTON—This year credit unions may find themselves in one of their toughest fights to preserve their tax-exempt status, Washington insiders are saying, adding the “black eyes” CUs have suffered regarding overdraft fees, and even stadium and sports team sponsorships, are contributing to problems.
Also, as CUToday.info reported, President Trump’s appointment of Ken Kies as assistant Treasury secretary for tax policy should draw the attention of credit union trade groups. Kies’ new role is a key position at Treasury at any juncture, but especially ahead of the expected rewrite of the tax code later this year, analysts stated.
What is concerning, at least one person stated, is Kies’ past record on credit union taxation. Just over ten years ago Kies co-authored a seven-page report for Deloitte that advocated the repeal of the federal tax-exempt status for credit unions of all sizes.
“I think this fight is going to be a lot more difficult than in the past,” said Defense Credit Union Council Chief Advocacy Officer Jason Stverak, citing more than one reason.
“Since the last time there was a very large fight over the tax status there's been a massive turnover in the members of Congress and their staff,” pointed out Steverak. “So, this is not an issue that many current members of Congress have had to deal with. There is a lot of education (from credit unions) that needs to be done.”
Weakening Of Support
Jason Stverak
Stverak said another issue is the weakening of support from traditional allies, in part due to decisions credit unions have made and bad press regarding CU overdraft policies.
“Over the last 18 to 24 months credit unions have suffered some PR black eyes,” Stverak said, adding that has impacted the outlook of some longtime supporters of the movement.
Stverak addressed the major sports sponsorships, such as Northwest FCU paying $7.5 million to secure the annual naming rights for the Washington Commanders, an NFL team playing next door to the nation’s capital.
“I think these large sponsorships are an issue the banks have been, and will continue to use in their arguments regarding credit union taxation,” Stverak said. “It's an issue that DCUC credit union CEOs and I have had to address—answer questions—during our advocacy visits on Capitol Hill. I will say this, the banks seem to get a pass on these kinds of things, which are just traditional marketing. The banks gloss over the fact that while Citibank was getting a government bailout they secured the naming rights to Citi Field, where the Mets play…We need to work hard this year to make sure members of congress understand the truth behind the bankers’ distortions.”
Fight Not The Same
America’s Credit Unions Chief Advocacy Officer Carrie Hunt agreed the 2025 tax fight is not the same as in previous years.
Carrie Hunt
“The tax fight is different this year for a number of reasons,” said Hunt. “One of those reasons is that we certainly have new policymakers and new members of Congress, and we have a new administration. Anytime you are trying to create policy as you are putting new individuals into certain seats there's always a big challenge relative to education. I also think it's a little bit different this time because there is a more active look at the overall approach to tax reform.”
Hunt addressed the appointment of Kies to assistant Treasury secretary for tax policy.
“The Ken Kies of the world are out there, and have expressed certain perspectives on the credit union tax exemption,” said Hunt, who reminded preserving the CU tax status is a key priority for ACU. “I think for certain individuals we will be able to better inform them and change their minds. I think for others, we will not—which is why it is incredibly important for us to double down, making sure we have members of Congress and members in in the Administration who really do understand and support credit unions. Building champions and supporting individuals who support us has always been key to our strategy for success, and coming out of this election we are well positioned in in that regard.”
John McKechnie
Sweeping Tax Reform
Washington credit union advocate John McKechnie acknowledged he can be skeptical when he hears talk about the tax fight being different.
“But in 2025, when it comes to the credit union tax exemption being threatened, I believe things are different, for several reasons,” he said. “First, there is an appetite among the Republican majority to do a ‘big, beautiful’ bill that includes sweeping tax reform. So the vehicle is there. Second, while the bank lobby doesn’t have anything new to say on the issue, some members of Congress seem willing to look at all tax exemptions, including credit unions.”
The good news, McKechnie said, is credit unions still have a strong policy argument in favor of maintaining the exemption.
“And we have a political one too—Congress should be reluctant to raise taxes when the public sentiment is to reduce them,” McKechnie said. “I think credit unions are ready for this moment.”