Treasury and IRS to Target Tax-Exempt Status of Race-Discriminatory Private Schools

The Treasury Department and the Internal Revenue Service are preparing to issue proposed regulations Thursday that would revoke the federal tax-exempt designation for private schools that discriminate on the basis of race rather than merit. The initiative follows executive orders from Donald Trump intended to restore merit-based policies and eliminate discriminatory practices. The rule would apply to admissions, scholarships, athletics, loans and other school-administered programs, potentially affecting as many as 18,000 institutions.

It cites longstanding Supreme Court precedents, including Brown v. Board of Education, Bob Jones University v. United States, and Students for Fair Admissions v. Harvard. While schools could continue curricula tied to genuine religious affiliation, they would be allowed to expand assistance programs using race-neutral criteria such as income, geographic location, individual hardship, first-generation status, military status, or academic achievement.

The regulation would take effect for taxable years beginning May 31 2027. The Department of Justice’s review highlighted documented discrimination at Yale University School of Medicine, George Washington University School of Medicine and Health Sciences, and Duke University School of Law.