The Treasury Department and the IRS on Thursday proposed new rules that would strip tax-exempt status from private schools that use race-based practices in admissions, scholarships, athletics, loans, or any other school-run program.
An administration official told the Daily Caller the rule could affect as many as 18,000 private schools. The proposal stems from executive orders signed by President Donald Trump aimed at ending discriminatory practices and restoring merit-based standards.
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 that discriminates on the basis of race, color, or national or ethnic origin. The rule spans admissions, educational policies, scholarships and loans, athletics, and every other school-administered or school-supported program, according to a Treasury Department statement.
Schools would still be permitted to weigh race-neutral factors when awarding financial aid and opportunities, including family income, geographic location, first-generation status, individual hardship, military family status, and academic achievement.
Treasury Secretary’s Statement
Treasury Secretary Scott Bessent framed the move as an effort to eliminate racial discrimination in education regardless of how it is described.
“Under President Trump, this Administration is standing up for America’s students by ensuring racial discrimination has no place in American education. Schools rebranding race-based preferences as equitable, inclusive, or diversity-enhancing does not change their discriminatory nature,” Bessent told the Daily Caller.
Bessent also posted the statement publicly, adding that the proposed regulations from Treasury and the IRS “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 is part of a broader push by the Trump administration to remove diversity, equity, and inclusion policies from federal agencies and institutions that receive federal benefits, with higher education identified as a major target.
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