New Treasury Rules May Cause Hundreds of Colleges To Lose Tax-Exempt Status Over Race Based Admissions

Colleges across the country could soon face serious financial consequences if they continue race-based policies. The Trump administration is exploring new IRS rules that would strip tax-exempt status from institutions that consider race in admissions, scholarships, and other programs.

Key Facts:

The Treasury Department is considering IRS rule changes that would strip tax-exempt status from colleges using race as a factor in admissions, aid, or other policies.
The proposed rules would apply to over 1,500 private, nonprofit schools, including Ivy League universities.
The changes could be implemented through IRS revenue procedures, bypassing the need for congressional approval.
The 2023 Supreme Court ruling against race-based admissions has laid the groundwork for broader action on race-focused programs.
Tax-exempt schools benefit from federal perks like tax-free bond sales, property tax exemptions, and tax-deductible donations.

The Rest of The Story:

The U.S. Treasury Department is quietly drafting proposals that would make race-based practices in higher education a financial liability.

According to insiders, the draft rules would prohibit tax-exempt status for any school that gives preference based on race, color, or national or ethnic origin in programs like financial aid or housing access.

Although not yet finalized, the proposals are part of a broader push by the Trump administration to rein in left-leaning institutions.

So far, Harvard and Columbia have faced scrutiny for alleged antisemitism and race-focused diversity efforts.

“Tax-exempt status is a privilege and not a right,” the Treasury said in a May 23 statement.

If enacted, these changes could dismantle programs aimed at correcting racial disparities, especially those targeting Black and Hispanic students.

While the IRS operates independently, this move would mark the most aggressive federal enforcement on campus policy since the 1983 Bob Jones University case, where race-based rules led to the school losing its nonprofit status.

Commentary:

This is a long overdue step toward restoring equality under the law.

Race-based policies—no matter how they’re justified—violate basic American principles.

If a school is going to receive tax benefits funded by the public, it shouldn’t be allowed to discriminate against any racial group, period.

The Supreme Court already ruled against affirmative action in admissions.

What’s left are the loopholes—scholarships, grants, housing preferences—that allow colleges to keep doing indirectly what they’ve been told not to do directly.

These proposed IRS rules aim to close those loopholes.

For decades, universities have leaned on “diversity” as a shield to justify programs that favor certain groups over others.

In practice, this has meant disadvantaging Asian and white applicants while privileging others based solely on skin color.

That’s not fairness. That’s discrimination with better PR.

Many Americans remember a time when Democrats were against all racial discrimination.

Now it seems the party has circled back to an era where race once again defines opportunity.

The party that championed colorblind equality in the 1960s now defends race-based favoritism in the 2020s.

Fortunately, most Americans are not on board with that shift.

Poll after poll shows that the public—across races—rejects the idea of using race to decide who gets into college or who gets a scholarship.

It’s unfair and it’s un-American.

What’s more, there’s strong precedent here.

The IRS has removed tax exemptions before for discriminatory practices.

The Trump administration is simply reviving an old tool to ensure schools follow the law—not a political agenda.

And despite media panic, these rules don’t bar schools from helping the disadvantaged.

They simply say: help based on need, not race.

That’s the only way to preserve the integrity of the system and the trust of the taxpayer.

The Bottom Line:

The Trump administration’s proposed IRS rule changes would penalize race-based preferences in higher education by threatening schools’ tax-exempt status.

This move could force institutions to abandon long-standing diversity programs.

If implemented, it would be a major realignment in how federal tax law interacts with race-conscious policies on campus.

The public is likely to support it—and universities will be forced to choose between social engineering and legal compliance.