WASHINGTON — The Defense Credit Union Council is urging congressional budget leaders to reject any changes to the federal tax status of credit unions as lawmakers consider a potential “Reconciliation 2.0” package.
In a letter to leaders of the House and Senate Budget Committees, the group said altering the longstanding tax exemption for credit unions could undermine financial services for millions of Americans, particularly servicemembers, veterans and federal employees.
The organization warned that credit unions play a critical role during periods of economic disruption, including government shutdowns, when they have historically provided 0% emergency loans, paycheck advances, fee waivers, loan deferrals and on-base financial assistance.
Jason Stverak, DCUC’s chief advocacy officer, said any change to the tax status could lead to higher costs and reduced access to financial services in military communities.
“This tax status reflects the not-for-profit, member-owned structure of credit unions and allows these institutions to continue returning value directly to their members,” Stverak said in the letter. “Using credit union tax status as a late-stage revenue offset could have unintended economic and community-level consequences.”
Data Cited
The group also pointed to industry data from the National Credit Union Administration showing that, as of the end of 2025, federally insured credit unions served approximately 144.7 million members and held about $2.43 trillion in assets. Defense-oriented credit unions alone serve more than 40 million members and manage more than $525 billion in assets, including operations on military bases and overseas, according to DCUC.
The letter acknowledged that budget negotiations often focus on identifying revenue offsets, noting that U.S. Treasury estimates place the value of the credit union tax exemption at about $2.48 billion in fiscal 2025 and roughly $32.17 billion over the 2025–2034 period. However, DCUC said such estimates may overstate potential revenue gains because they do not fully account for changes in consumer and institutional behavior if the exemption were repealed.
‘Mission-Driven Partners’
Anthony Hernandez, DCUC president and CEO and a retired U.S. Air Force colonel, said weakening credit unions would reduce their ability to provide real-time financial support during crises.
“Credit unions are not just financial institutions, they are mission-driven partners in supporting the financial security of millions of Americans, including those who serve our country,” Hernandez said. “Congress should be reinforcing these institutions, not considering policies that could limit their ability to serve members when it matters most.”
