The Treasury Department and the Internal Revenue Service issued
Under the proposed rule, a private school would not qualify for federal tax-exempt status under Section 501(c)(3) if it adopts, maintains, or enforces a policy or practice that discriminates on the basis of race, color, or national or ethnic origin. The rule would apply across admissions, educational policies, scholarships and loans, athletics, and every other school-administered or school-supported program.
The proposal extends a battle the Trump administration has been fighting with private universities such as Harvard over their policies,
The proposed regulations would apply to tax-exempt private primary and secondary schools, colleges, universities, professional schools and trade schools. The Treasury and the IRS estimate that the proposal may affect as many as 18,000 private educational institutions.
The proposal would also eliminate longstanding provisions of IRS guidance that allowed schools to favor certain racial preferences in admissions, facilities, programs, scholarships, and financial assistance. The Treasury and the IRS said they have concluded that these provisions are inconsistent with a uniform nondiscrimination standard and are incompatible with the Supreme Court's case law in cases such as Bob Jones University v. United States, Students for Fair Admissions v. Harvard, and even Brown v. Board of Education, although that ruling actually enabled schools to open their doors for the first time to racial minorities.
The Treasury and the IRS said the proposal would not prevent a private school from maintaining a religious mission, curriculum, or program of religious observance. Religious schools may continue to select students based on genuine religious affiliation or membership to remain consistent with existing federal law.
"Under President Trump, this Administration is standing up for America's students by ensuring racial discrimination has no place in American education," said Treasury Secretary Scott Bessent in a statement Thursday. "Schools rebranding race-based preferences as equitable, inclusive, or diversity-enhancing does not change their discriminatory nature. Today's Treasury and IRS proposed regulations establish a clear standard, and the institutions that continue to use discriminatory practices will no longer receive the benefits of federal tax-exempt status."
The proposal would still allow schools to continue expanding educational opportunities to assist disadvantaged students using race-neutral criteria such as family income, geographic location, first-generation status, individual hardship, military family status, or academic achievement when awarding admission or financial assistance. However, schools would not be permitted to make decisions or confer benefits on the basis of race, color, or national or ethnic origin.
"Private educational institutions that promote discriminatory practices will no longer be afforded the benefits of federal tax-exempt status," said IRS CEO Frank Bisignano in a statement. "Today's proposed regulations put institutions on notice and schools that continue to engage in racial discrimination should expect to lose that status."
