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Jun 1, 2025  |  
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Ryan Ellis


NextImg:Our Tax Code Should Treat Credit Unions Like Banks

The next month will be one in which Congress finally gets down to brass tacks on what the tax reform bill long talked about will actually look like. While most of the tax provisions of the 2017 Tax Cuts and Jobs Act can be made permanent without any offsetting tax increases (thanks to the “present policy” baseline Congress has adopted), that’s not true for everything in the bill.

Functionally, there is no longer any difference between credit unions and banks.
Several essential pro-growth tax reforms (full business expensing, immediate research expensing, and parity for business interest deductions) are not part of the “present policy” baseline. Neither is the ransom that must be paid to blue area Republicans in the form of a higher personal state and local tax (SALT) deduction for itemizers. Neither is the package of “new Trump” tax cuts on tips, Social Security benefits, and overtime.
Those non-present policy baseline tax cuts must either be temporary and allowed to expire in the 10 year window, or if Congress wants to make some or all of them permanent, it must find offsetting tax increases to do so. Reports are that the pro-growth trifecta of expensing, research, and interest is going to be the priority for permanent policy, which means finding billions of dollars per year in offsets.
In such an exercise, Congress should look at any number of tax provisions which are counterproductive or have outlived their usefulness. Near the top of that list is the tax free treatment of credit unions, especially large credit unions. According to Congress’ Joint Committee on Taxation, ending the tax loophole for credit unions would raise $3 billion to $4 billion annually, money that would be much better allocated to pro-growth tax relief.
Functionally, there is no longer any difference between credit unions and banks. They each offer very similar products — checking and savings accounts, mortgages, car loans, credit cards, etc. While credit unions are technically restricted to...

No hoodwinking or hornswoggling here.

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