Treasury and IRS Propose Regulations to Deny Tax-Exempt Status to Private Schools Using Race in Admissions and Programs
The U.S. Treasury Department and the Internal Revenue Service (IRS) have proposed new regulations that would revoke the tax-exempt status under section 501(c)(3) for any private school that considers race, color, or national or ethnic origin in any of its programs or policies. This includes admissions, scholarships, loans, athletics, diversity, equity, and inclusion (DEI) programming, and third-party partnerships. The proposed rule, published in the Federal Register on September 4, 2026, states that such consideration, regardless of intent or whether it serves remedial or diversity objectives, constitutes discrimination. Treasury Secretary Scott Bessent commented that 'branding race-based preferences as equitable, inclusive, or diversity-enhancing' does not alter their discriminatory nature. The regulations would apply to private schools at all levels, including colleges and universities. Comments on the proposal are due by November 3, 2026, and if finalized, the rules would take effect for taxable years b... 
