EXCLUSIVE: Trump Admin Moves To Revoke Tax Exempt Status For Racially Discriminatory Schools
The Treasury Department and the Internal Revenue Service (IRS) are expected to roll out regulations that would end the federal tax-exempt status for private schools that discriminate on the basis of race rather than rewarding merit, the Daily Caller learned.
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The Treasury and the IRS will issue the proposed regulations Thursday based on President Donald Trump’s executive orders that aim to restore merit and end discriminatory practices, an administration official told the Caller. (RELATED: Here’s How Trump Has Put ‘Radical’ DEI In The ‘Dustbin’ Throughout 2025)
This rule would apply to private schools that participate in racially discriminatory practices across admissions, scholarships, athletics, loans, educational policies, and other school-administered programs. The rule could affect as many as 18,000 private schools, the official told the Caller.
“Under President Trump, this Administration is standing up for America’s students by ensuring racial discrimination has no place in American education,” Treasury Secretary Scott Bessent told the Caller. “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.”
There are several well-documented instances of race-based discrimination in private schooling. The Department of Justice (DOJ) review of internal policies, email correspondence, and other publicly available materials found that the Yale University School of Medicine had discriminated based on race in its admissions process. Similar cases of discrimination were found at the George Washington University School of Medicine and Health Sciences as well as the Duke University School of Law.
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“Private educational institutions that promote discriminatory practices will no longer be afforded the benefits of federal tax-exempt status,” IRS Chief Executive Officer Frank J. Bisignano told the Caller. “Today’s proposed regulations put institutions on notice and schools that continue to engage in racial discrimination should expect to lose that status.”
The IRS and Treasury cited longstanding Supreme Court precedents set in Brown v. Board of Education, Bob Jones University v. United States, and Students for Fair Admissions v. Harvard.
Although these cases established precedent to eliminate tax-exempt status based on an institution’s discriminatory status, the proposal allows private schools to maintain certain curricula and observances based on genuine religious affiliation.
Schools would still be able to expand educational and assistance programs for students using criteria based on income, geographic location, individual hardship, first-generation status, military status, or academic achievement, so long as it is race-neutral.
This rule would apply to taxable years beginning May 31, 2027.
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