The One Big Beautiful Bill Act or OBBBA is now law. While much of the focus in the credit union industry has been on regulatory relief and lending flexibility, there are significant tax implications that credit unions need to understand. Nanaz Benyamini, is a Partner and tax-exempt specialist at SingerLewak. She helped us look at some of the tax related implications for credit unions.

Tax-Exempt Status Preserved

For credit unions, the tax-exempt status was not eliminated. “There was initial concern that the tax-exempt status for credit unions was going to be jeopardized,” says Benyamini. “It was something originally proposed in the House reconciliation process, but was ultimately pulled out. In the final version of the tax law, they left it alone.” This decision helps credit unions maintain their competitive edge and reinvest more dollars into member services.

Boost for Auto Lending

Another benefit from a credit union perspective is that personal interest on auto loans for U.S. assembled vehicles is now tax-deductible. That’s up to $10,000 annually per year with income-based phaseouts. “This could encourage more people to finance their next vehicle, especially with a credit union,” says Benyamini. “Credit unions are already well known for competitive auto loan rates. This gives them another reason to promote those offerings.” The deduction can, to varying degrees, offset the current rise in prices.

Executive Compensation Excise Tax Expanded

There are downsides to the bill. It expands the 21% excise tax on executive compensation above $1 million at tax-exempt organizations, including credit unions. “Previously, this primarily applied to the top five highest-paid employees,” explains Benyamini. “Now it applies to all employees, including former employees employed with the organization after 2016.” Executive compensation above $1 million is exceptionally rare in the industry. Nevertheless, it’s a change that may call for a compensation review for credit unions with higher compensation, as well as tighter compensation planning and internal awareness.

Be Aware, Be Prepared

From new compliance obligations to emerging opportunities, the One Big Beautiful Bill Act reshapes the financial landscape in meaningful ways. While the preservation of tax-exempt status is a win, provisions like the expanded excise tax mean credit unions can’t afford to take their eye off the ball.

“At SingerLewak, we’re helping credit unions navigate both the good and the complex,” says Benyamini. “Understanding these changes now can prevent headaches later.”

Have questions? Let’s talk through your options. It could be the start of a beautiful friendship.

Nanaz Benjamini
Partner
SingerLewak Tax Department
[email protected]

Sheila Balzer
Credit Union Services Team Leader
Partner, Assurance & Advisory
[email protected]