The Credit Union Tax Status
Due to our not-for-profit, people-first approach, credit unions do not pay the federal income tax on profits as those profits go back to our members. Congress codified in statute credit unions’ federal income tax status in 1934 with the Federal Credit Union Act. More than 90 years later, the benefits of this status are clear.
Still, credit unions do pay many state and local taxes and fees, including payroll and property taxes. It is also important to note that dividends paid to credit union members mean they pay the taxes on those profits. That’s why a tax on a credit union is a tax on its members.
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For more than 90 years, Congress has preserved the credit union tax status because credit unions uphold the responsibility that comes with being a not-for-profit financial institution: Serving consumers who need them most.