Private schools could lose tax exemption over race policies

Private schools in the United States could lose their tax-exempt status if they consider race in admissions, scholarships or similar areas under proposed rules issued Thursday by the Treasury Department and Internal Revenue Service.

The proposed regulations say a private school would not qualify for tax-exempt status if it discriminates on the basis of race, color, national origin or ethnic origin. The agencies estimate that as many as 18,000 private educational institutions could be affected.

The proposal would apply to primary and secondary schools, colleges and universities, and professional or trade schools. The Treasury Department said final rules could apply to taxable years starting on or after May 31, 2027.

Treasury Secretary Scott Bessent said schools cannot avoid the proposed rule by describing race-based preferences as equitable, inclusive or diversity-enhancing.

The proposal is part of President Donald Trump's wider push against diversity, equity and inclusion programs and against universities that his administration says promote anti-conservative policies.