WASHINGTON–Is the heightened threat being seen in Congress to the credit union tax exemption in 2025 a one-off, or will it become a major annual worry?
The CU Daily put that question to two people amid reports that eliminating the credit union tax exemption remains a bullet point in the 55-page document in the House that lists all the “pay-fors” for the tax cuts President Trump wants.
“The context for why this has raised its profile this year has less to do with credit unions and less to do with the tax status of credit unions and all that, as it does with the budget challenges and the new president coming in with a new Congress and trying to accomplish one of their important pillars, which was an extension of the 2017 tax cuts,” said Jim Nussle, president and CEO of America’s Credit Unions. “That was their agenda and that’s what they moved forward with. But I think the context this year, particularly in the House, is that the House has said, ‘We want to offset everything, we want to offset all the tax cuts (with spending cuts), we want to offset tax extensions with closing other tax provisions. So, that’s probably more of the issue then a specific agenda item on the part of Congress or the administration that credit unions are going to be on the table. Everybody is on the table this year.”
Looking Forward
Looking forward, Nussle said it’s “very possible” a heightened threat to the credit union tax exemption could become the new normal.
“We have to be vigilant about that going forward but–and this is something we anticipated as soon as 2017 (when the tax cuts were enacted), because that’s the last time we engaged on this in this kind of way– ever since we have been ramping up with data, with stories, with our strategy. It’s probably something I would recommend we stay vigilant on as we look into the future and beyond this particular battle.”
Hopeful It’s a One-Off, But…
At the Defense CU Council, Chief Advocacy Officer Jason Stverak agreed the tax exemption has always been discussed in every Congress, but it’s being taken much more seriously this year.
“I hope it’s a one-off, but I don’t have that crystal ball. We could put this to bed if we could get (House) leadership to say that it’s off the table, but until that happens I think everybody is in overdrive mode,” said Stverak. “(The threat) is much more pointed than it has been in the past. My hope is that as members of Congress and the banking industry see the incredibly strong and unified opposition to this change and that this is not a road they go down into the future.”
An Old Truism
Moving forward, Stverak said credit unions will need to be guided by an old DC axiom when it comes to threats to the tax exemption. “It’s much more difficult to take it out of any legislation than it is to prevent