McGuire Woods
September 10, 2026
Key Takeaways
- On Sept. 3, 2026, Treasury and the IRS issued proposed regulations that would end tax-exempt status for private schools that discriminate on the basis of race, color, or national or ethnic origin in admissions, scholarships, athletics or other programs.
- The proposed regulations would apply to private primary and secondary schools, colleges, universities, and professional and trade schools, but not to public schools.
- The proposed regulations prohibit discrimination “for any purpose,” which would eliminate current exceptions allowing race-based scholarships and programs designed to promote diversity.
- If finalized, the new rules will take effect for tax years beginning after May 31, 2027, so private schools should promptly review their admissions, scholarship and other programs for race-based criteria.