NDBA Joins Letter to Seek Federal Study on Credit Unions’ Tax Status

Posted: Jul 30 2025

The Treasury Department should conduct a study of the $2.37 trillion credit union system to determine whether its current activities align with its longstanding tax-exempt status, 52 state bankers associations, including NDBA, said in a joint letter to the department.

Credit unions have become increasingly complex since the passage of the Federal Credit Union Act in 1934, which exempts the institutions from many taxes as long as they serve individuals of modest means. However, their recent activities call into question whether they should still qualify for that tax exemption, with 450 credit unions now holding more than $1 billion in assets, the associations said. Last year, credit unions announced 22 bank acquisitions totaling nearly $12 billion in assets, and one federal credit union bought the multimillion-dollar naming rights to the Washington Commanders’ NFL stadium.

“Seemingly at odds with their mission and structure, these credit unions acquire commercial banks, offer nationwide membership and sponsor professional sports teams,” they said. “They even draw tax-exempt income from business entities for IT, insurance and other services. Their growth suggests that they are operating like banks without the same requirements, including federal corporate income tax obligations.”

Along with a study on their tax-exempt status, the Treasury Department should provide recommendations about whether Congress should introduce legislation that would require all credit unions to pay federal income tax and compel federal credit unions to pay unrelated business income tax like other nonprofits, the associations said.

To read the letter, visit: https://www.aba.com/-/media/documents/letters-to-congress-and-regulators/jointltrkies20250729.pdf