The U.S. Treasury and IRS have proposed regulations to revoke tax-exempt status from private schools engaging in racial discrimination, aligning with President Trump’s executive orders.
| PULSE POINTS |
❓ WHAT HAPPENED: The Trump administration is moving to strip federal tax-exempt status from private schools that use race, color, or national or ethnic origin as a factor in admissions, scholarships, educational programs, or other school activities. The U.S. Treasury Department and Internal Revenue Service (IRS) proposed regulations Thursday that would make compliance with federal nondiscrimination requirements a condition of maintaining tax-exempt status under Section 501(c)(3). 📰 DETAIL: Treasury and the IRS estimate the proposal could affect as many as 18,000 private schools, colleges, universities, professional institutions, and trade schools nationwide. Treasury Secretary Scott Bessent said schools would not be able to avoid the restrictions by labeling race-based policies as diversity, equity, or inclusion (DEI) initiatives, arguing that such terminology does not change the underlying practice. The agencies cited Supreme Court rulings, including Brown v. Board of Education, Bob Jones University v. United States, and Students for Fair Admissions v. Harvard, in support of the proposed standards. Religious schools would still be permitted to maintain their religious missions, curricula, and observance programs, as well as consider genuine religious affiliation as allowed by federal law. Schools could also provide assistance based on race-neutral factors such as household income, geographic location, first-generation status, individual hardship, military-family status, or academic achievement, but would be prohibited from using race or ethnicity to determine eligibility or benefits. The regulations would not take effect immediately and, if finalized, would apply to tax years beginning after May 31, 2027, following a public-comment period. 💬 KEY QUOTE: “Schools rebranding race-based preferences as equitable, inclusive, or diversity-enhancing does not change their discriminatory nature.” – Treasury Secretary Scott Bessent 🎯 IMPACT: The proposed rule could force thousands of private schools to eliminate race-based admissions, scholarships, and diversity policies or risk losing valuable federal tax benefits. It would further extend the Trump administration’s push to make race-neutral standards the norm in education, potentially prompting significant policy changes across private and religious schools. |
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