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IRS Proposes Ending Tax-Exempt Status For 18,000 Private Schools Over Race-Based Policies

IRS Proposes Ending Tax-Exempt Status For 18,000 Private Schools Over Race-Based Policies

Author: The College Investor September 21, 2026 Duration: 9:09
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The Treasury Department and IRS released proposed regulations that would deny 501(c)(3) tax-exempt status to any private school that “adopts, maintains, or enforces” a policy discriminating on the basis of race, color, or national or ethnic origin, including policies designed to benefit minority students.

The proposed rule focuses on admissions, scholarships, student loans, athletics, and every other school-administered program. The agencies estimate it could affect as many as 18,000 private schools and roughly 750,000 students who may qualify for race-based scholarships. This is happening as the Trump Administration is pushing back against race-conscious education policy.

“Schools rebranding race-based preferences as equitable, inclusive, or diversity-enhancing does not change their discriminatory nature,” Treasury Secretary Scott Bessent said in the announcement, first reported by the Daily Caller.

The regulations would apply to taxable years beginning after May 31, 2027, which the IRS says gives schools time to rewrite policies. This makes sense after the policy debate that came when the administration tried revoking Harvard’s tax-exempt status in 2025.


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