With Congress considering major tax reforms, credit unions are stepping up advocacy to protect their federal income tax exemption, defend regulatory independence and ensure uniqueness isn’t lost in Washington’s political shuffle
UPDATE: The House Ways and Means Committee released a nearly 400-page draft of the reconciliation bill for markup by the House Ways & Means Committee to review on Tuesday afternoon.
“America’s Credit Unions thanks Chairman Jason Smith and the House Ways and Means Committee members for recognizing the value of protecting the credit union tax status in their proposed reconciliation bill,” said Jim Nussle, America’s Credit Unions President/CEO. “Together with leagues, credit unions, and industry partners, we have worked hard to show the impact credit unions have on their 142 million members and communities. We remain engaged with the committee as it considers amendments through the markup process to ensure no new tax is added on credit unions. Credit unions are here to strengthen Main Street, and we will keep our momentum.”
“Nowhere in the bill is there any reference to ‘credit unions,’ ‘federal credit unions,’ or 501(c)(14) tax-exempt entities,” Jason Stverak, DCUC Chief Advocacy Officer, said. “There are no proposed changes to the Internal Revenue Code that would affect the credit union tax-exempt status, nor does the bill introduce Unrelated Business Income Tax (UBIT) provisions or modifications to NCUA oversight.”
“As we’ve seen in the past, harmful provisions can be added at the last minute, sometimes in the dead of night,” DCUC CEO Anthony Hernandez said. “That’s why we are staying engaged with every step of the process — from markup to floor debate — and working in lockstep with leagues, member credit unions, and the broader ‘Don’t Tax My Credit Union’ coalition to ensure policymakers fully understand the critical value our institutions bring to the communities we serve.”
Both trade associations will continue to monitor the legislation closely. Amendments are still possible.
Come back for more updates as the situation evolves.
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Washington is buzzing, and not just from the early summer heat. This past week and for months before, credit unions across the country mobilized their advocacy arsenal to defend their federal income tax exemption, preserve regulatory independence and protect the not-for-profit model that has long set them apart from for-profit banks. From committee hearing rooms to digital ad campaigns, America’s Credit Unions, the Defense Credit Union Council (DCUC), and league partners—have made their presence known in the halls of Congress and beyond.
The House Ways and Means Committee’s markup of a sweeping reconciliation bill Tuesday is at the heart of the action. Reconciliation is a legislative process that helps move critical budget bills more swiftly by avoiding filibusters. Jim Nussle, president and CEO of America’s Credit Unions, said he feels relatively confident about maintaining credit unions’ federal income tax exemption, but his group isn’t taking any chances. Nussle is a former eight-term congressman (R-Iowa) who served as chairman of the House Budget Committee, overseeing the budget review process, as well as serving on the then-Banking (now House Financial Services) and Ways & Means (Taxes) Committees.
“This is a moment to say, first of all, credit unions delivered,” Nussle said. “The amount of outreach and engagement by credit union members, by team members at credit unions, by boards of directors, by CEOs—every single one of them seems to have done something this year. Some have done outreach to members that they’ve never done before to help deliver the message of the credit union difference and to say, ‘Don’t tax my credit union.’ That we’ve earned the tax status based on the mission we all execute and deliver on in our communities.”
While the tax exemption is the biggie for Washington this week, it certainly wasn’t the only issue. An independent NCUA and the shape of its future leadership, as well as CFPB funding, are forcing the credit union community to play man-to-man defense along with an assertive offense.
The Tax Exemption Fight: Holding the Line
At the center of this week’s advocacy push is preserving the federal tax exemption, a large part of how credit unions return profits to their member-owners. Lawmakers are under pressure to find revenue offsets in the reconciliation package and could reconsider the credit unions’ tax-exempt status.
The Independent Community Bankers of America (ICBA) have launched aggressive campaigns to challenge it.
“The ICBA is going to be in town this week,” DCUC Chief Advocacy Officer Jason Stverak noted. “We wanted to make sure that every member of Congress and their staff had the full set of facts… so they can make informed decisions on the issues facing community financial institutions across this country. The ICBA’s line of attack focuses on credit union acquisitions of community banks, stadium naming rights, and sponsorships—arguing that these perks signal behavior that should bring an end to credit unions’ tax exemption. In response, DCUC has launched a digital ad campaign aimed at ICBA conference attendees. The message? Credit unions remain member-owned, mission-driven financial institutions that reinvest earnings into their communities.
“We want to make sure that as [the ICBA] are advancing an anti-credit union agenda, that we are stepping up and pushing back… and it’s an educational opportunity to remind members of Congress, and as importantly, their staff, of the importance of protecting the credit union tax status,” Stverak said.
“We’re going to continue to encourage our members and the entire credit union industry to be in constant contact with their members of Congress—especially those on the Ways and Means Committee—advocating for the protection of the credit union tax status,” he added.
Nussle warned, “Even if our ‘stay out’ strategy works this week, it doesn’t mean we’re done… That’s why we never take our eye off the ball. You can score on defense. And I believe if we’re able to stay out of this tax bill, that will be a score on defense.”
NCUA: Standing Behind Independent Oversight
Beyond the credit union tax exemption battle, credit unions’ attention is on the National Credit Union Administration (NCUA). The industry experienced a group WTH moment when President Trump dismissed two NCUA board members—Todd Harper and Tanya Otsuka. The two have filed suit over their dismissal, which is ongoing.
A broader constitutional question looms: Can the President remove politically appointed board members at independent regulatory agencies without cause?
You might recall W requested Ellen Seidman’s resignation from the Office of Thrift Supervision (OTS) more than a year before her term was up in 2001. It’s not quite the, ‘You’re Fired,’ the NCUA Board Members got. Still, at that time, she warned, “Ignoring the 5-year term creates an unfortunate precedent: it implies that the office can be treated as a typical executive branch position in which senior officers serve at the pleasure of the President, so that any Director may be dismissed at any time for any reason, including by a President motivated by displeasure at the Director’s official actions.”
Carrie Hunt, chief advocacy officer at America’s Credit Unions, stated on a press call on May 12, “We support a separate regulator for credit unions. The NCUA is an independent agency—that has been our longstanding position.”
Interchange Has Gone Stateside
Credit union groups are also stepping up at the state level. In Texas and Alaska, DCUC sent letters opposing interchange legislation modeled after federal proposals that failed in Washington. “Retailers are shifting their focus to state capitals after falling short in D.C.,” said Stverak. “We’re working with state leagues to defend members’ interests wherever those threats appear.”
“In the past, in other agencies relative to the removal of individuals, even when those individuals have won those cases, they’ve not been put back on those boards.”
~America’s Credit Union Chief Advocacy Officer Carrie Hunt
When asked whether the trade association supports the reinstatement of Board Members Harper and Otsuka because the NCUA is an independent agency, Hunt continued, “We have not taken a specific position relative to the constitutional question at hand. I will note that when cases have occurred in the past in other agencies relative to the removal of individuals, even when those individuals have won those cases, they’ve not been put back on those boards.
“Mr. Harper and Ms. Otsuka are asking for relief that is, I’d say, unusual in the legal term of being unusual and unexpected relief. I do not think that what is occurring right now, and what we have stated, is in any way, shape or form in conflict with our core position and actually supports that.”
Jim Nussle also previously stated, upon the removal of the two NCUA Board Members: “At America’s Credit Unions, we support an independent agency. That has been our advocacy position; there’s nothing that changes that. We want an independent agency to govern the safety and soundness of credit unions at the federal level,” said Nussle. “We also believe the best course for the NCUA is to have all three board members. So, we would call on the Trump administration to continue to make appointments, to continue to go through the nomination process, and ask the Senate to consider those nominees.”
Credit union industry advocates are pressing the administration to make timely nominations to restore a three-member board to maintain robust oversight.
CFPB: A Regulatory Wild Card
Then there’s the Consumer Financial Protection Bureau (CFPB), which remains a source of uncertainty for the credit unions. Jonathan McKernan, who had been floated as head of the CFPB, was recently nominated to a Treasury role. With no clear nominee on the horizon and a looming budget battle, the agency’s future remains murky.
Congressional Republicans are attempting to slash CFPB funding by as much as 70%, aiming to reduce the amount the bureau receives from the Federal Reserve. “We should have clarity once the budget process plays out a little bit,” Hunt noted, indicating that leadership and funding decisions at the CFPB will shape how the Bureau behaves.
Credit unions have a mixed relationship with the CFPB. While they support consumer protection, many feel the Bureau’s rules often fail to account for their cooperative nature and not-for-profit model.
Looking Ahead: Advocacy That Never Sleeps
From tax policy to regulatory governance, this week has underscored just how much is at stake for credit unions in Washington. Industry leaders are balancing legislative lobbying, public education and internal coordination across trade associations at the federal and state levels. It’s a constant strategic, high-stakes game of subbing in the right people at the right times.
NCUA Staff Nearing Retirement Are Running for the Door
Internally, NCUA staffing cuts following a visit from DOGE have raised questions inside the agency, specifically whether any employees staying have skills that might be valuable in other departments, according to a Bloomberg Law report. The article also said about 100 of the agency’s 1,200 staff had already left, and another nearly 200 had applied for the employee buy-out plan. The NCUA initially was looking for 217; not all will be approved.
Hunt expressed measured confidence, saying, “We are not concerned at this point in time. Credit unions have extended exam cycles and a strong self-interest in running sound institutions.”
“This type of full core press advocacy is something we’re going to continue at DC,” Stverak promised. “It not only advances the credit union agenda but also helps buttress and support the entire credit union industry.”
Nussle defended why the trade association plays a lot of defense: “I’ll confess I have a difficult time when credit unions, or anybody for that matter, wonders why we spend so much time working on defense. And in this instance, defense is offense. You can score on defense.”
As Congress lurches toward Memorial Day – the current self-imposed deadline for the reconciliation bill – with markups, late-night negotiations and political horse wrangling, credit unions are taking both proactive and reactive stances. Their unified voice, grounded in a century-old mission of service and community, is once again proving its power in the nation’s capital.