Credit Unions

What’s the issue?

Currently, credit unions are exempt from federal income taxes.  

Credit unions were granted tax-exempt status with the understanding that they would use their tax savings to provide basic consumer financial services to specific customer segments, for example, low- and moderate-income individuals who share a common bond through an employer, church, school, or community.

How does this affect your community?

Since the 1930s, when their tax-exemption was enacted, many credit unions have evolved far beyond their original missions. They have expanded their fields of membership and markets from financially underserved individuals and vulnerable communities to the entire United States. 

Instead of focusing on their mission and serving their existing members, large credit unions have used their tax-exempt advantage to purchase tax-paying community banks across the country. Every bank acquired by a credit union results in a tax revenue reduction that could be used to fund and invest in opportunities and essential services that lead to community development and growth.

What can policymakers do?

Policymakers should ensure that credit unions return to their original mandate to serve the financially underserved and vulnerable communities. Congress should reexamine and reform credit unions, so they are subject to the same regulatory, supervisory and tax requirements as other financial services providers.