U.S. Treasury, IRS Propose Ending Tax-Exempt Status for Schools Using Race in Admissions

According to CNBC, the U.S. Treasury Department and the IRS on Thursday proposed regulations that would end federal tax-exempt status for thousands of private schools that use race to influence admissions, student aid and other school programs. The proposal could affect as many as 18,000 schools and would apply to taxable years beginning on or after May 31, 2027. Treasury Secretary Scott Bessent said the rules are intended to stop racial discrimination in U.S. education, while the proposal does not affect schools that select students based on religion. The Treasury Department and IRS said the rules could also affect scholarships tied to racial, ethnic or national identity and may reduce the tax break households receive on donations to schools that lose 501(c)(3) status. Experts said the proposal is part of the Trump administration's broader effort to roll back diversity, equity and inclusion policies at educational institutions.