Understanding the Credit Union Tax Advantage

Credit unions are considered not-for-profit financial institutions. This status is rooted in our structure: we are member-owned, serve a defined field of membership, and are guided by volunteer leadership.

There is often political rhetoric suggesting that credit unions do not pay taxes. This is not entirely accurate. Last year, Greater Community Credit Union paid $127,000 in payroll taxes, $17,850 in real estate taxes, and over $100,000 in sales tax related to a building project. In addition, our members paid taxes on the $6 million in dividends and interest they received.

What credit unions do not pay taxes on is retained earnings. This distinction is an important benefit, allowing credit unions to remain different from other financial institutions and to return more value to our members. However, this benefit continues to face challenges in the legislative arena.

Last year, our members sent several hundred messages in support of maintaining the credit union tax status. Fortunately, credit unions have many legislative allies who recognize the value we provide to our members and communities.

As we approach the November election, there will be candidates who strongly support credit unions. I appreciate all members who take the time to vote for candidates who value credit unions and our tax-exempt status.