Trump admin targets tax-exempt status at private colleges
The Treasury has proposed regulations that would strip thousands of private schools of their tax-exempt status and threaten a valuable tax break for donations.
TL;DR
- The U.S. Treasury and IRS have proposed regulations to end federal tax-exempt status for private schools using race in admissions or financial aid.
- This could impact tax breaks for donations to these schools and affect student scholarships.
- The proposed regulations would apply to taxable years beginning on or after May 31, 2027.
- The move is seen as part of a wider effort to dismantle Diversity, Equity, and Inclusion (DEI) programs.
- Schools that continue discriminatory practices will no longer receive federal tax-exempt status.
- The proposal does not affect schools that select students based on religion.
- Donations to schools that lose tax-exempt status may no longer be tax-deductible.
- The financial impact could extend to students who qualify for race-based scholarships.
- Schools may need to modify policies or work with donors to comply with the new regulations.
- The Treasury expects most schools will change their policies to retain tax-exempt status.