Today, the Defense Credit Union Council (DCUC) sent a letter to the Honorable Jason Smith, Chairman, and the Honorable Richard Neal, Ranking Member, of the House Ways and Means Committee, urging their support for the preservation of credit unions’ federal tax-exempt status. DCUC’s letter comes ahead of the committee’s hearing titled, “The Need to Make Permanent the Trump Tax Cuts for Working Families,” scheduled for tomorrow, January 14.

In the letter, Jason Stverak, DCUC's Chief Advocacy Officer, highlighted the core values that have defined credit unions since their inception over a century ago.

"Credit unions were established in the United States over a century ago to provide affordable financial services to individuals of modest means who were often excluded from traditional banking institutions,” said Stverak. “Unlike banks, credit unions are not-for-profit financial cooperatives owned and controlled by their members. This unique structure ensures that earnings are reinvested into the membership through lower fees, better loan rates, and enhanced financial services. The tax-exempt status of credit unions, codified in the Federal Credit Union Act of 1934, reflects our cooperative nature and community-focused mission which remains integral to our purpose today."

The current tax status enables credit unions to deliver significant economic and social benefits, including over $16 billion annually in direct financial benefits to members, with a special focus on underserved communities such as rural areas and military families.

Stverak shared how credit unions provide valuable services that would be impacted without their tax-exempt status, including savings passed onto members, through lower interest rates on loans, higher returns on savings, and reduced fees. Credit unions also lead efforts to promote financial literacy, equipping members with the tools to make informed financial decisions.

Stverak noted credit unions are also committed to furthering small business support by offering competitive loans, particularly to veterans and startups, as well as affordable mortgage options.

If Congress were to eliminate the credit union tax exemption, the impact would be severe.

Members would face higher loan rates and reduced returns on savings, adding an estimated $15 billion in financial burdens annually. Low-income and underserved populations, including service members, could lose access to affordable financial services. Notably, credit unions often step in where other financial institutions do not, aiding communities during natural disasters and economic challenges. Without credit unions, government programs would face greater demand. Furthermore, Stverak stressed how removing the tax exemption would reduce competition in the financial services market, forcing many smaller credit unions to merge or close.

DCUC urged the committee, if they choose to examine the tax status of credit unions, that there also be an examination of the tax advantages enjoyed by for-profit banks, such as Subchapter S tax structures and accelerated depreciation provisions. Stverak stressed how these tools allow banks to continue avoiding billions in taxes annually—a benefit not extended to credit unions despite their community-driven mission.

“Credit unions continue to play a vital role in strengthening the financial security of American families, especially military families. Preserving the tax-exempt status of credit unions is crucial for ensuring that these benefits remain available to the communities that need them most,” said Anthony Hernandez, DCUC President/CEO. “We urge the Ways and Means Committee to reaffirm its support for credit unions and protect our ability to effectively serve millions of Americans, especially our military and veteran communities.”

For more information, please contact Jason Stverak at jstverak@dcuc.org and visit dcuc.org/advocacy.

Read the letter here.