Trump administration proposes revoking tax-exempt status for private schools using race in admissions
The U.S. Treasury Department and IRS proposed new regulations that could strip thousands of private educational institutions of their federal tax-exempt status if they use race as a factor in admissions, scholarships, or other programs. The move aligns with broader efforts to eliminate diversity, equity, and inclusion (DEI) initiatives at schools following the Supreme Court's ruling against race-conscious college admissions. If finalized, these rules would take effect for taxable years starting on or after May 31, 2027. Experts warn that this proposal could remove a key tax benefit currently available to donors of private institutions and may also impact student scholarships. The Treasury estimates the regulations could affect up to 18,000 schools across various educational levels in the U.S., including universities and trade schools. Treasury Secretary Scott Bessent stated the goal is to eliminate racial discrimination within education by removing tax benefits from discriminatory practices. The proposal excludes religious-based admissions criteria but targets race-related policies broadly. The IRS emphasized that institutions engaging in such practices should expect to lose their tax-exempt status, signaling a significant shift in federal oversight of educational equity programs.
