Full Deep-Dive: The Credit Union Tax Exemption Scam

(Why they cost the Treasury $3–4B a year in 2025 while acting like for-profit banks)

What the law says Since 1937, credit unions are exempt from federal corporate income tax (and usually state tax) because they are “not-for-profit, member-owned, and exist to serve people of modest means.”

What actually happens in 2025

  • The 15 largest credit unions are bigger than 90% of U.S. banks:
    1. Navy Federal – $178B assets
    2. State Employees’ (NC) – $55B
    3. Pentagon Federal – $35B
    4. SchoolsFirst – $31B …and 73 more over $10B each.
  • They offer the exact same products as Bank of America: 4.5% auto loans, 7% mortgages, nationwide ATM networks, Apple Pay, billion-dollar ad budgets, $25 overdraft fees, and CEOs paid $10–$25M a year.
  • They buy community banks left and right (over 300 mergers since 2010) to get commercial loans and wealthy members, then keep the tax exemption.
  • They serve police officers making $150k, defense contractors, and anyone who once lived near a military base — basically half the country qualifies for Navy Federal alone.

The money

  • Top 100 credit unions made $23B in net income in 2024 (NCUA data).
  • If taxed at the normal 21% corporate rate, that’s roughly $4.8B in federal tax.
  • JCT/Treasury 2025 estimate of the exemption: $3–4B annual revenue loss.
  • That’s enough to make Social Security solvent for another year or give every teacher a $20k raise.

The original justification is dead

  • 1937: Credit unions were tiny, volunteer-run, served factory workers.
  • 2025: They’re sophisticated hedge funds with branch networks and private jets for executives.

Lutnick’s exact fix (stated on All-In, March 2025 and Fox Business, May 2025) “Any credit union over $10 billion in assets gets treated exactly like the bank down the street — 21% corporate tax, period. Under $10B you keep the full exemption so the little guy still wins. That’s it. One sentence in the reconciliation bill. Raises $3–4B a year and ends the hypocrisy tomorrow.”

What happens if they cry “we’ll have to charge members more!” They already charge the same or higher fees than banks (2024 CFPB study). Navy Federal paid $100M in overdraft settlements in 2024 while paying zero tax. They have $25B in excess capital — they’ll be fine.

Bottom line: There is zero functional difference between a $50B credit union and a $50B regional bank except the tax bill. Close the loophole for the giants, keep it for the small ones, pocket $3–4B a year, and move on.

That’s literally how simple 90% of these fixes are. Want the one-sentence legislative text for this one (and the other 49)? Say go.

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Author: timothymccandless

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