A message from Keith Sultemeier, President and Chief Executive Officer

Published March 20, 2025

On the outside, credit unions and banks seem very similar to many Americans. They offer comparable products and may appear to have the same operating model, but there are some key differences in how credit unions are structured and how they are taxed.

While credit unions have federally insured deposits and are as heavily regulated as banks, they are structured quite differently. Banks are for-profit corporations with shareholders who demand returns on their investments. Credit unions are not-for-profit cooperatives where members-owners demand a return of value. Credit union charters also restrict them to a limited set of investments and which members they can serve. As a result, credit unions tend to be a bit smaller and are run more conservatively than banks. In 1937, Congress decided that the unique structure of credit unions exempts them from federal income taxes; however, credit unions still pay all other taxes like property and sales tax.

Last year, an independent study by American University determined credit union members received over $35 billion in additional benefits over what they could have received at banks. The funds that would have gone to pay federal income taxes went instead to members in the form of lower fees, higher yields on savings and better rates on loans.

Although credit unions hold only 7% of U.S. banking assets, many banks argue that because credit unions have gotten larger over time, offer more products than before and serve a broader audience, they should be taxed like banks. This is akin to a major cookie supplier saying the Girl Scouts should be taxed like a corporation because they are bigger, have more flavors and are more popular than they used to be.

What it really boils down to is the purpose of the business. The goal of credit unions has always been to help those in their community with affordable access to credit and safe, attractive investment options. Banks, on the other hand, are focused on enriching their shareholders. There is nothing inherently wrong with that, but it’s just not the way credit unions operate.

This is why your experience as a member of Kinecta is different. At a bank, you are merely a customer. At Kinecta, you’re an owner and our goal is to protect your financial future and see you prosper.

Unfortunately, Congress may levy a new tax on all credit unions, including Kinecta. Congressional leaders are meeting to determine how to pay for the extension of the Tax Cuts and Jobs Act (TCJA). Recently, the House Budget Committee passed a resolution to begin the process of tax reform. Congressmembers will review every opportunity to reduce the deficit “price tag” that accompanies the extension of the TCJA.

To send a clear message to your Member of Congress, please click here and use our credit union movement’s Connect for the Cause platform. It only takes one minute and is the most direct, powerful way to ensure Kinecta can continue serving you.

Thank you for being a member!

Keith Sultemeier
President and Chief Executive Officer
Kinecta Federal Credit Union