Power Grab/Fire anyone who can stop him
Treasury proposes to strip tax-exempt status from schools and colleges that consider race in any program
The proposed regulations, released September 3, 2026, could affect up to 18,000 institutions; comments are due November 3.
What happened
On September 3, 2026, the Treasury Department and IRS released proposed regulations that would deny 501(c)(3) status to any private school, college, university or trade school that considers race, color or national or ethnic origin in any program or policy. That includes admissions, scholarships and athletics, for any purpose, including remedial or diversity aims. Treasury estimated up to 18,000 institutions could be affected. Loss of exemption would end donors’ deductions.
The proposal was published in the Federal Register on September 4, with comments due November 3, 2026. It would first apply to taxable years beginning after May 31, 2027. Secretary Scott Bessent said rebranding race-based preferences as equitable or inclusive did not change their nature.
Who benefited
Treasury and the IRS would gain the power to revoke tax exemption over race-conscious programs, and the standard has no exception for remedial or diversity aims. The threat applies to private schools, colleges, universities and trade schools. The leverage rests on donors losing their deductions.
Who wanted something
Treasury Secretary Scott Bessent wanted schools to stop considering race in any form. He said rebranding race-based preferences as “equitable or inclusive” did not change their nature. The proposal covers admissions, scholarships and athletics, for any purpose.
Who lost out
Up to 18,000 private schools, colleges, universities and trade schools could lose tax-exempt status, and their donors their deductions. Treasury’s own estimate sets that figure. The rule would first apply to taxable years beginning after May 31, 2027, so institutions have until then to change their programs.
Why it matters
The rule makes tax exemption conditional on a school not considering race, color or national or ethnic origin in any program. It covers remedial and diversity programs as well. The proposal is open for comment until November 3, 2026, and has not taken effect.
Sources Associated PressGibson DunnJNS