Story perspectives

Treasury and IRS Propose Revoking Private Schools’ Tax-Exempt Status

9/9/2026

Summary

Story summary

The U.S. Treasury Department and IRS propose revoking tax-exempt status of private schools that use race-based policies.
The rule would take effect on May 31, 2027 and could affect up to 18,000 schools.
Prohibited practices include race-based admissions, scholarships, loans, athletics, and any school-administered program.
Schools may still consider income, geography, first-generation status, hardship, military ties, or merit.
IRS CEO Frank Bisignano warned schools continuing discriminatory practices should expect loss of status.

History

Historical Context

After the 1976 Supreme Court ruling in *Bob Jones University v. United States*—which ordered the school to lose about $5 million in tax deductions for racially discriminatory policies, the IRS has enforced civil-rights standards on tax-exempt entities. Building on that precedent, the Treasury proposal to revoke exemption for up to 18,000 private schools echoes the same compliance pressure.

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Story summary

The U.S. Treasury Department and IRS propose revoking tax-exempt status of private schools that use race-based policies.
The rule would take effect on May 31, 2027 and could affect up to 18,000 schools.
Prohibited practices include race-based admissions, scholarships, loans, athletics, and any school-administered program.
Schools may still consider income, geography, first-generation status, hardship, military ties, or merit.
IRS CEO Frank Bisignano warned schools continuing discriminatory practices should expect loss of status.

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