Cost of Credit Union Tax Exemption Drops Again, Trump Administration Says

The Trump Administration’s estimate of the ten-year cost of the credit union tax exemption continues to fall, with the Treasury Department now estimating the cost at $21.878 billion between 2020 and 2029.

The Trump Administration’s estimates of the cost of the credit union exemption has wildly fluctuated.

In its budget, released in March, the Trump Administration estimated the credit union tax exemption would cost $24.7 billion over ten years.

But in its budget released in 2018, the administration pegged the cost of the tax exemption at $35.79 billion between 2018 and 2027. The year before that the figure was $35.31 billion, a whopping 32.3% increase over the estimate made in the last year of the Obama Administration.

The Congressional Joint Committee on Taxation estimated the cost of the credit union tax exemption at $9.9 billion between 2018 and 2022.

As in the past, the recently released Treasury figures for all tax expenditures do not include information about why the estimates were updated.

The Treasury report also showed that there are at least 50 federal tax expenditures that cost the federal government more than the credit union tax exemption. The largest tax expenditure is the exclusion of employer contributions to health insurance premiums. That is estimated to cost the federal government more than $3.1 trillion between 2020 and 2029.

The Government Accountability Office has put pressure on the Office of Management and Budget to study the cost and usefulness of all tax expenditures, but the Trump Administration and past presidents have declined to do so.

The credit union tax exemption continues to be a source of friction between banks and credit unions, with banks charging that the tax expenditure has outlived its usefulness and credit unions contending that they spend the tax savings on their members.