The Trump administration is revoking tax‑exempt status from private schools that employ racial preference policies such as diversity, equity and inclusion (DEI).
Trump Administration Targets Private School Tax‑Exempt Status
The Internal Revenue Service proposed the rule on Thursday, targeting roughly 18,000 private elementary, secondary, post‑secondary, trade and professional institutions.
Treasury Secretary Scott Bessent said the regulation closes a loophole in which schools rebrand race‑based preferences as DEI initiatives while continuing discriminatory practices.
“Schools rebranding race‑based preferences as equitable, inclusive, or diversity‑enhancing does not change their discriminatory nature,” he said. “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.”
Harvard sparked the shift in 2023 after the Supreme Court ruled Students for Fair Admissions v. Harvard unconstitutional, and former President Claudine Gay indicated applicants could still disclose race on applications, suggesting admissions boards would consider it.
Harvard renamed its DEI office to the Office of Community and Campus Life, a tactic used by many schools to hide DEI programs while keeping them functional.
The Justice Department recently found Yale Medical School guilty of racial discrimination.
The IRS says tax‑exempt status depends on compliance with fundamental public policy, including the prohibition of racial discrimination.
The rule expands beyond admissions and hiring to cover racial‑preference policies in scholarships, loans, athletics and any school‑administered program.
Affinity groups that use school space to discriminate on the basis of ideology will likely lose their exemption under the new guidance.
Medical schools that practice “racial concordance” – matching non‑white patients with doctors of the same race – will also be barred from applying discriminatory standards.
The regulation permits race‑neutral criteria such as family income, geography, first‑generation status, hardship, military family status or academic achievement for admission and aid decisions.
These proxy variables echo the Michigan model used to circumvent affirmative action before the state banned it in 2006, a practice that resurfaced after the Supreme Court’s decision.
If finalized, the rule takes effect May 31, 2027.
Breccan F. Thies, White House correspondent for The Federalist and 2025 Dao Prize co‑recipient, previously covered education and culture for the Washington Examiner and Breitbart News. He holds a degree from the University of Virginia and is a 2022 Claremont Institute Publius Fellow. Follow him on X @BreccanFThies.
