Navigating the One Big Beautiful Bill Act: What Credit Unions Need to Know
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, brings sweeping changes to tax and financial policy. Several of the law’s provisions warrant specific attention from credit unions, especially if involved in education lending, charitable initiatives, or community investment. Below are some of the new law’s most impactful provisions for credit unions.
OBBBA introduces a 1% excise tax on foreign electronic remittance transfers, effective after December 31, 2025. Fortunately, transfers made through banks, credit unions, and U.S.-issued cards are exempt. Credit unions offering remittance services should still review the fine print to ensure continued compliance.
New “Trump Accounts”, long-term savings accounts for children under 18, are created under the new law and may be opened beginning next year. These accounts allow for government-funded $1,000 seed deposits and employer matches, in addition to annual contributions. Trump Accounts create opportunities for credit unions to explore product opportunities tailored to families focused on education or future planning.
On the employer side, credit unions should prepare for the provision in the OBBBA which allows workers to deduct eligible overtime pay between 2025 and 2028. Individuals are allowed to deduct the premium portion of qualified overtime pay up to a limit of $12,500 annually ($25,000 for married couples filing jointly). There will be additional guidance on this, and the IRS will provide transitional relief in 2025 for both employers and taxpayers, but now is a great time to consider how payroll and W-2 systems are tracking and reporting overtime pay.
Credit unions should be aware of expanded rules around the 21% excise tax on compensation over $1 million. Per OBBBA, excise tax on excessive compensation to employees of tax-exempt entities applies to all current and former employees, rather than only the five highest-paid employees, beginning for tax years after December 31, 2025. Additionally, several charitable giving incentives have been made permanent, including a non-itemizer deduction ($1,000 Individual/$2,000 married filing jointly) and new credit for donations to scholarship-granting organizations, presenting strategic engagement opportunities for credit union foundations.
OBBBA also makes permanent
the limitation on the deductibility of home mortgage interest for loans
exceeding $750,000 ($375,000 for married individuals filing separately). Under
this provision, mortgage interest expense remains deductible only up to these
loan amounts. Additionally, mortgage insurance premiums continue to be
deductible. The disallowance of interest expense on home equity debt is also
made permanent, unless the debt is used to buy, impro...