US Treasury proposes new tax rules for private schools

The Trump administration is proposing new regulations through the Treasury Department and the IRS that would bar tax-exempt private schools from using race, color, national origin, or ethnicity as factors in admissions, scholarships, and athletics. The proposal aims to eliminate existing exceptions that allow race-based policies if they are framed as diversity or equity-enhancing. Treasury Secretary Scott Bessent stated that rebranding such preferences does not change their “discriminatory nature.” If finalized, these rules could affect approximately 18,000 private institutions nationwide, including hundreds of schools in Michigan.

In a related development, the Education Freedom Tax Credit, a federal voucher program established by a tax code overhaul, is set to take effect on January 1. While critics argue the program diverts taxpayer funds to private education, some public school districts, such as the Cleveland Metropolitan School District, are investigating whether they can access funds from the program. Experts suggest that public districts could potentially receive around $1,000 per student, though significant logistical hurdles remain for districts to successfully tap into these resources.