The Treasury Department proposed the change Thursday in a new regulation that, if made final, would kick in after May 2027. The rule is broadly aimed at ending any policies or programs that show favor to students because of their race, and it specifically says such benefits in admissions, scholarships and facilities “would be incompatible” with the rule.
It’s the latest attempt by the Trump administration to pressure schools and colleges to weed out diversity, equity and inclusion policies.Trump officials have used Civil Rights-era laws to unwind the policies, saying they discriminate against white and Asian American students.
It’s incredibly rare for the federal government to go after a college’s tax-exempt status, but there’s one notable precedent. Bob Jones University, a small Christian school in South Carolina, lost the benefit in the 1970s over a ban on interracial dating and marriage on campus. The Supreme Court upheld the IRS’s decision to deny the school its exemption. The school has since ended the ban and regained tax-exempt status in 2017.
Laws forbid the IRS from targeting individuals and organizations for ideological reasons, and federal officials are not allowed to direct IRS investigations.
To maintain nonprofit status, which allows donations to be tax-deductible, organizations must follow IRS rules on lobbying, political campaign activity and annual reporting requirements, as well as other obligations.
The Trump administration describes the new proposal as a move toward restoring merit in the nation’s education systems.
The Justice Department has separately opened investigations into several medical schools that it accuses of favoring black and Hispanic students in admissions. Trump officials say any such favoritism violates Title IV of the Civil Rights Act of 1964, a federal law that forbids discrimination in education and was created to fight segregation and its impact.
A statement from IRS Chief Executive Officer Frank J. Bisignano said private schools that promote discriminatory practices will no longer be exempt from taxes.
“Today’s proposed regulations put institutions on notice and schools that continue to engage in racial discrimination should expect to lose that status,” he said.
