Trump targets schools' tax-exempt status
Archived — this story has rotated out of today’s deck. It is kept here in full.
The gist
Trump administration proposes stripping tax-exempt status from private schools offering race-based aid, affecting up to 18.
The move escalates the campaign against DEI, threatening donations and financial aid.
Background
The Trump administration has been pressuring colleges and schools to dismantle diversity, equity, and inclusion (DEI) programs. This proposal, announced by the IRS on September 3, 2026, would revoke tax-exempt status from private schools that provide targeted help based on race, citing the Supreme Court's 2023 decision against race-conscious admissions. It is seen as an escalation in the administration's campaign against what it calls 'wokeness' in education.
How it unfolded
- Sep 3, 2026The Treasury Department and IRS announced a proposed rule to strip tax-exempt status from private schools offering race-based aid, potentially affecting up to 18,000 institutions.
- Sep 3, 2026The proposal draws immediate criticism from experts and officials, who call it illegal and warn of a chilling effect on donations and programs.
- Sep 4, 2026News outlets report that the rule is set to take effect next May and will likely face legal challenges.
Who’s saying what
- Administration
- The rule is designed to end federal tax-exempt status for private schools that engage in racial discrimination, according to a Treasury press release.
- Critics
- Critics call the move blatantly illegal and shortsighted, saying it does 'nothing to make education fairer.'
- Experts
- Nonprofit and tax law experts say the proposal could have a chilling effect on private schools and universities, even if it never goes into effect.