By Jason Stverak
I serve as the chief advocacy officer for the Defense Credit Union Council. Our members are credit unions on and around military installations, in veteran communities, and in towns where service is a family tradition. We see the financial realities of military life up close: frequent moves, surprise expenses, deployment separations, and the constant need for safe, affordable financial products that work in the real world—not just on paper.
That’s why I want policymakers and the public to recognize what’s really happening in the renewed drive by ICBA and other banking trade groups to strip away credit unions’ federal income tax status.
This isn’t simply a disagreement about how to “level the playing field.” It’s part of a broader campaign—one that shows up again and again across sectors—to weaken cooperatives wherever they provide a real alternative to shareholder-owned, profit-maximizing competitors.
Start with the basics. Credit unions are not investor-owned corporations. They are member-owned, democratically governed, and organized to serve people—often in communities the market underserves. The federal government has recognized that difference for a century because it is a difference that matters. When credit unions do well, their success doesn’t get paid out to outside shareholders. It gets returned to member-owners in the form of better rates, lower fees, and stronger service.
No Loophole
And this model is not small. Federally insured credit unions serve roughly 145 million Americans and hold trillions of dollars in assets. That is not a loophole. That is a national system of cooperative finance that Americans choose—because it works for them.
So why the sudden urgency to tax it?
Their goal isn’t fairness. Their goal is to narrow the field until cooperative competitors can’t survive.
And this playbook exists well beyond finance.
In rural America, cooperatives built the essentials when private investment stayed away. Rural electric cooperatives power communities across more than half the nation’s landscape and operate in places where high costs and low population density made the “market solution” a myth. Rural telephone cooperatives did the same for communications long before broadband became a household term. Agricultural cooperatives allow producers to market goods, purchase supplies, and keep more value in their local economies.
These cooperatives are America’s quiet infrastructure. They exist because people organized, not to maximize profits, but to meet needs.
So, when we hear the argument that cooperative tax treatment is merely a “subsidy,” we should ask: subsidy for whom?
For the military spouse trying to refinance a car after a permanent change of station move? For the young, enlisted family building emergency savings? For the rural county that can’t attract big-bank branches but still needs fair credit? For the farm community that relies on cooperative systems to finance production and keep local businesses alive?
Keeping Score
In Washington, the debate is often reduced to budget scorekeeping. Treasury estimates the “exemption of credit union income” has a measurable revenue effect. That number gets waved around like it’s found money.
But policy is not an accounting trick. If Congress taxes credit unions like banks, that cost doesn’t disappear into the air. It gets pushed onto member-owners. In the defense community, that means servicemembers and veterans paying more, directly or indirectly, at the exact moment we should be strengthening their financial readiness.
And once lawmakers accept the premise that cooperatives should be taxed out of their structure whenever they grow or succeed, the precedent won’t stop at finance.
If the “solution” to competition is to dismantle cooperative rules, then rural electric and telephone cooperatives, also recognized in federal tax policy, become easier targets the next time Congress looks for pay‑fors. Agricultural co‑ops, already navigating complex tax rules, become political bargaining chips instead of community economic engines.
We should be clear-eyed: this is a choice about the kind of economy we want. Do we want an economy where only investor-owned firms are “legitimate” at scale? Or do we want an economy that respects pluralism and where cooperatives are allowed to compete, grow, and serve when markets fall short?
A Better Option
Here’s a better path, one that respects both community banks and credit unions, and strengthens the communities we all serve:
First, Congress should publicly reject any tax-package “pay‑for” that taxes member-owned credit unions. Don’t let cooperative finance become a budget gimmick.
Second, lawmakers should take a broader view: protect cooperative tax frameworks across sectors so co‑ops can keep delivering power, connectivity, and economic resilience in rural America.
Third, regulators and policymakers can address legitimate questions about competition and consolidation without breaking the cooperative model. If a transaction raises local concerns, scrutinize the transaction. Don’t punish every member-owner nationwide.
Fourth, cooperative members, including military families, should make their voices heard now. When this fight is framed as “banks versus credit unions,” it sounds like an industry dispute. In reality, it’s about what happens to your rates, your access, and your community.
Cooperatives are not a special interest. They’re a public solution—built by the people who rely on them. If we let Washington tax cooperatives into extinction one sector at a time, we will not get a “level playing field.” We will get a narrower economy, less local resilience, and fewer choices for the Americans who most need them.
Jason Stverak is Chief Advocacy Officer at the Defense Credit Union Council.