Status Update: Federal Tax Reform, House Budget Committee ‘Pay-for’ List, Credit Union Strategy

Posted by Ben Shuey on January 24, 2025

Congress continues its efforts to develop a comprehensive budget, replace the expiring Tax Cuts and Jobs Act, and act on the new Administration’s top priorities including border security, military readiness and government efficiency. Late last week, the House Budget Committee released the current list of statutory spending and tax programs that could be utilized by the House Ways and Means Committee in their development of the budget reconciliation package that we expect to roll out in the weeks ahead. This 50-page list was published as an informational exercise to outline all programs or tax exemptions that could be eliminated to offset and/or pay for specific policy concepts being developed in the proposed package. As the credit union tax exemption is one of the statutory tax programs currently in code, it was included in the list of programs.

Key GoWest congressional delegation members who serve in leadership positions and on relevant committees have relayed to us that the credit union tax exemption is not being targeted. Several of those leaders take the extra step of sharing that they will protect credit unions’ tax exemption to the fullest extent.

That said, credit unions must always advocate for their unique structure and the important value and service you deliver to consumers and communities across the country. We’re constantly monitoring policy developments and assessing risks to credit unions and will continue to provide updates and calls to action as needed. 

Additional Background Details  

The credit union tax exemption was listed in the overall tax section of the document on page 11 and was scored by the Budget Committee as a potential $30 Billion savings over 10 years. Each listing provided the committee members with the ability to note or discuss whether making a change to this program is a viable option. The listing is provided below: 

Eliminate Exemption of Credit Union Income  

$30 billion in 10-year savings  

• Credit unions are exempt from federal income taxes on their earnings. This option would subject credit unions to the federal income tax.  

The House Budget Committee list of ‘pay-fors’ includes everything “under the sun” that could possibly be used to offset additional spending or targeted budget cuts. Different than in previous years, Congress is looking at all possible avenues for savings in order to hit their budget targets and reduce the debt, and no stone was left unturned.

Obviously, it would be extremely irresponsible to the 140 million credit union members and constituents to tax credit unions. As stated previously, we have had several meetings with key members of the GoWest delegation, and we remain confident that the vast majority of our delegation understand and fully support credit unions and the important services you provide to your individual members and communities – who are their constituents. We continue to reiterate this messaging with key leaders and the entire delegation as we lead up to the National Governmental Affairs Conference in Washington D.C. in March.

With Chairman Crapo (R-ID), Ranking Member Wyden (D-OR), and Senators Barrasso (R-WY), Bennet (D-CO), and Cantwell (D-WA) all on the Finance Committee, we feel confident that their voice and collective support of credit unions will remain strong.

We are excited to fully roll out the new GoWest Economic and Community Impact Reports, which break down the credit union impact in each state and congressional district. We will be drip messaging some of the information into key conversations in the weeks ahead, and will fully deliver the details and corresponding messaging when we go to Capitol Hill on March 5th, as part of the National GAC. 

The GoWest Advocacy Team is diligently monitoring the discussions and any movement on the tax exemption and reconciliation conversation. We will be doing specific outreach to credit unions where we believe conversations between credit union leaders and targeted Congressional offices would be helpful. We are also working with our congressional delegation on proactive credit union priorities – to introduce and/or co-sponsor regulatory relief and credit union act modernizations that will improve the operating environment for credit unions and service to your members. Please be on the lookout for additional activities where you can take action and get involved!   

Posted in Advocacy News, Advocacy on the Move.