The Treasury Department and IRS are readying plans to revoke the tax-exempt status of schools that engage in race-based or discriminatory practices under the guise of diversity, equity, and inclusion (DEI) programs.
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The Daily Caller reports that the Trump administration is 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.
SCOOP: The Treasury Department and the IRS are expected to roll out a new reg to end federal tax-exempt status for private schools that discriminate on the basis of race, the Daily Caller learned.
This would apply to schools found to have discriminated in admissions, athletics,… pic.twitter.com/SeqzS5LWIl
— Rebeka Zeljko (@rebekazeljko) September 3, 2026
An administration official told the Daily Caller the proposed regulations are based on President Donald Trump’s executive orders that aim to restore merit and end discriminatory practices.
Under Treasury Secretary Scott Bessent, the administration will utilize IRS enforcement mechanisms and public policy doctrines to target educational institutions that factor race into admissions, scholarships, or other student programs.
The move is in response to a number of documented cases of private schools engaging in race-based discrimination.
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A 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.
Other examples of discrimination were found at the Duke University School of Law and at the George Washington University School of Medicine and Health Sciences, according to the Daily Caller.
The administration cites historical legal precedents—such as Brown v Board of Education, Bob Jones University v. United States and Students for Fair Admissions v. Harvard—arguing that tax-exempt status is a privilege contingent on complying with fundamental public policies against racial discrimination.
The proposed rules and guidance focus on practices across private K-12 schools and higher education institutions deemed to provide preferences or exclusions based on race.
Schools can 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.
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The proposed rules would apply to taxable years beginning May 31, 2027.