By Michael Wilson, Anthony Hernandez and Amey Sgrignoli
When U.S. Air Force veteran Ron Hernandez, who spent his post-service life helping more than 3,400 fellow veterans find housing, was diagnosed with stage four pancreatic cancer, he faced an unimaginable reality: losing the home he and his wife had lived in for decades.
Despite his selfless work through his nonprofit, Moving Veterans Forward, Ron was $47,000 short of securing ownership of his longtime home.
Cobalt Credit Union, a credit union serving military families, and its charitable arm, the SAC Foundation, stepped in. With a $25,000 donation, they helped Ron and his family stay in their home.
This is the credit union difference in action. And proposals to remove credit unions’ federal tax-exempt status would put people like Ron at risk.
We are encouraged that lawmakers continue to recognize the importance of preserving credit unions’ tax-exempt status. But we know this issue could resurface at any time. It’s time to put this debate to rest for good, because protecting credit unions means protecting people.
Fundamentally Different From Other FIs
At our core, credit unions are fundamentally different from other financial institutions. We are not-for-profit, member-owned financial cooperatives that reinvest profits directly into the people and communities we serve. For example, in 2024 alone, Members 1st Federal Credit Union supported more than 500 community organizations, and their associates volunteered over 5,800 hours at 400+ community events. These are just a few examples of how credit unions prioritize people over profit. This community investment is part of the reason why credit unions have held a tax-exempt status for nearly a century.
But let’s be clear: credit unions do pay taxes.
According to America’s Credit Unions:
- Credit unions contribute over $36 billion annually in local, state, and federal taxes through payroll and excise taxes. In 2024, credit unions and their employees paid $8.7 billion in direct taxes.
- In 2024, our tax status saved credit union members $26.9 billion—and even non-members saw $10.5 billion in benefits from the presence of credit unions in their communities.
- The $2.9 billion Congress invests through our tax exemption returns more than $297 billion in economic impact, including small business lending, job creation and personal financial stability.
Across the country, 4,617 credit unions provide 1.2 million jobs and serve one in every three Americans. Ending our tax exemption wouldn’t just affect us, it would directly harm the people we serve and reduce competition for working families in the financial marketplace.
That includes military families. Defense credit unions serve service members across the globe, helping them build credit, buy homes, and navigate life’s financial challenges. Many of these families live paycheck to paycheck. Some are relocating, others are transitioning out of active duty. Credit unions are often their only safe and affordable option.
Locally, community credit unions help people afford childcare, pay off student loans, buy their first homes, expand their families and grow their small businesses. We don’t just lend money; we take care of our people. When Ken and Lesley Logan set out to adopt their daughter, Jeanie, they turned to Members 1st for help. They had 24 hours from the time they got the call about a baby needing a home to come up with the funds for the adoption agency and a Home Equity Line of Credit made it possible. Because Members 1st could act quickly and offer flexible terms, the Logans were able to bring Jeanie home. That’s the credit union difference in action.
CUs Support Small Businesses
Credit unions do not just serve individual consumers they also support small businesses. During the COVID-19 pandemic, the credit union industry stepped up to support local businesses by providing thousands of Paycheck Protection Program (PPP) loans to help them keep their doors open and employees paid. Members 1st was proud to be one of those credit unions, serving as a vital lifeline for our business community, and was the 9th largest provider of PPP loans in the entire country.
Credit unions meet the micro needs within their communities at multiple levels. At Belco Community Credit Union, the workforce is 70% women, and they have a growing Spanish-speaking member community. To meet their needs, they employ highly trained associates who speak Spanish and can assist members in the branch or on the phone The goal is to eliminate any barrier to accessing financial information or services.
Eliminating our tax exemption would jeopardize all of this.
Critics claim credit unions have an unfair advantage. But let’s look at the facts: credit unions combined hold just 1.2% of total U.S. financial institution assets, whereas, the largest 100 banking institutions hold 74% of the market share. Credit unions provide consumers with more choices, competitive rates, and lower fees—all benefits from profits reinvested into member services. They also provide critical financial services to rural and diverse underserved communities with $105.9 billion in outstanding small business loans from low-income designated credit unions.
In many of the communities credit unions serve, we are often the only financial institution present—a reminder of the many existing banking deserts across the country. These areas, frequently overlooked by traditional banks, are home to underserved populations who face significant barriers to financial access. By operating in these communities, we fill a critical gap, offering essential financial services where few, if any, alternatives exist.
As tax discussions continue, we are calling on lawmakers to go a step further and stop reopening this conversation. Stand with Main Street America and the millions of Americans who benefit from credit unions every single day. Preserve the credit union difference permanently.
- Michael Wilson is President and CEO at Members 1st Federal Credit Union.
- Anthony Hernandez is President of the Defense Credit Union Council.
- Amey Sgrignoli is President and CEO at Belco Community Credit Union.