As a valued member of Volt Credit Union, we’re keeping you informed about an important challenge facing credit unions across the nation. Over the coming months, legislators in Washington, D.C., will be considering tax reform as part of a broader deficit reduction strategy. Unfortunately, some banks and their trade associations are using this as an opportunity to question why credit unions are exempt from paying corporate income tax.
This limited tax exemption has been a cornerstone of credit unions’ ability to serve their members effectively. It’s critical to understand why it exists and why it must remain in place.
Why Are Credit Unions Tax-Exempt?
Credit unions are structured differently from banks, which is why they’ve been exempt from corporate income tax for decades. Here are a few key reasons:
- Not-for-Profit Operations: Unlike banks, credit unions operate as not-for-profit entities. Instead of maximizing profits for shareholders, we reinvest earnings to:
- Maintain higher capital levels for financial stability.
- Offer better rates on deposit and loan products to our members.
- We Pay Other Taxes: Credit unions contribute significantly to local and national economies by paying payroll, property, and other taxes.
- Economic Impact: By offering competitive rates and affordable financial services, credit unions help consumers retain more of their hard-earned wages—money that often goes back into the local economy.
- Promoting Competition: Credit unions provide an essential source of consumer credit and foster competition, keeping larger financial institutions in check.
Losing this tax exemption would remove much of the incentive for institutions like Volt Credit Union to operate as a credit union. With existing restrictions on whom we can serve and what we can invest in, this would significantly impact our ability to serve you, our members.
Why This Matters Now
While Congress has upheld the tax exemption for credit unions numerous times in the past, the current environment presents new challenges. With multiple tax exemptions under review, there’s a real risk that credit unions could be overlooked.
This is where your voice comes in.
How You Can Help
The America’s Credit Unions (ACU) is actively working to ensure legislators understand why this exemption matters. However, the most compelling voices come from people like you. By contacting your representatives, you can help ensure they prioritize the credit union tax exemption.
Here’s how you can make an impact:
- Visit www.DontTaxMyCreditUnion.org.
- Use the tools provided to send a message to your representatives in Congress.
- Share this initiative with family and friends who are also credit union members.
Protecting Our Future Together
At Volt Credit Union, we’re dedicated to Powering Your Potential, and that includes standing up for policies that allow us to serve you better. Thank you for taking the time to learn about this critical issue and for joining us in protecting the credit union difference.
Together, we can ensure that credit unions like ours remain a strong, vibrant alternative to traditional banks—now and for generations to come.