By Susan J. Kenney

CEO, Norfolk Community Federal Credit Union

Credit unions are speaking as Congress and the new administration move quickly on tax reform

and announced plans to end the industry’s tax exemption status. Here’s what you should

know:

In communities across America, credit unions are doing what they've always done

best—putting people first. As not-for-profit financial cooperatives, credit unions are

fundamentally different from banks. They exist to serve their members, not to generate profits

for shareholders. That’s why more than 140 million Americans—43% of the population—have

chosen credit unions as their trusted financial partner.

There is a growing concern that lawmakers may consider eliminating the federal income tax

exemption for credit unions. Make no mistake: a tax on credit unions is a tax on you and the

millions of other Americans who depend on them.

Credit Unions’ tax status was established by congress in 1937, and it is crucial to all credit

unions’ survival and continued ability to service people left behind by banks. As cooperatives,

credit unions succeed when people come together. We are all stronger when we advocate and

act with one unified voice. Just like in the movie “It’s A Wonderful Life,” with Bailey Building

and Loan fighting against Mr. Potter’s authoritarian way.

Credit unions were born out of necessity. More than a century ago, when banks turned their

backs on working families, farmers, and small business owners, credit unions stepped in to

serve. They provided accessible financial services to those excluded from the mainstream

banking system—and they continue to do so today.

Unlike banks, credit unions are not-for-profit, and member owned. Any earnings they generate

are returned to members through better interest rates on loans, higher returns on savings,

fewer fees, and personalized services like financial counseling. This community-first model

helps individuals and families build stronger financial futures and strengthens local economies.

Credit unions are democratically owned and operated, governed under a “one member, one

vote” principle, regardless of the amount of deposit. While banks are operated with the

purpose of maximizing profits for their shareholders, credit unions’ sole purpose is to return

those benefits to their member-owners and the communities they serve. Despite their growth, credit unions remain a relatively small player in the financial sector,

holding only 8.8% of assets compared to banks, which control 91.2%. Yet their impact is

outsized when it comes to improving financial well-being.

The federal income tax exemption for credit unions exists because of their unique structure and

mission. Congress recognized long ago that credit unions provide essential financial services to

underserved communities, and that taxing them like for-profit banks would undermine that

mission.

It’s important to note that credit unions already contribute billions in state and local taxes. The

exemption only applies to federal income tax on profits—profits that are reinvested back into

the membership, not handed to wealthy shareholders. If Congress were to eliminate this exemption, it would significantly reduce the ability of credit unions to provide the services their members count on. That means fewer low- and no-fee accounts, less access to affordable loans, and reduced financial support for families and small businesses.

Eliminating the tax exemption wouldn't just hurt credit unions—it would hurt you. It would

force your credit union to operate more like a bank, focusing on profits instead of people. And

ultimately, those costs would be passed on to you in the form of higher fees and worse rates.

This isn’t just a financial issue—it’s a fairness issue. Why should consumers who have chosen a

cooperative financial model be penalized because of pressure from big banks that fear

competition?

Credit unions are not a loophole. They are a lifeline for millions of Americans.

As federal lawmakers consider tax reform, they need to hear directly from you. Tell your U.S.

Representative and Senators: Don’t tax my credit union—it’s a tax on me. Visit

donttaxmycreditunion.org for more information and a link to your lawmakers. You can also get

the link on our website: www.norfolkcommunityfcu.org 

Your voice matters. Let Congress know that you stand with credit unions—and that any attempt

to tax them is an attack on the financial security of more than 140 million Americans.

Here at Norfolk Community Federal Credit union, it has been our mission to help our members

fulfill their dreams and meet their financial goals for almost 75 years. We’re in business to help

people improve their lives through realizing their financial goals and to provide financial

services to members at the lowest possible cost. People helping people help themselves. We

have a Board of Directors who are local members of your community, volunteering their time

to oversee the general direction of the credit union. So, credit union profits don’t get

distributed to them, like bank shareholders get bank dividends. We reinvest it in you, our

members!