This bill dramatically increases the excise tax on large private university endowments from 1.4% to 21% of net investment income. The tax applies to private institutions with 500+ students and endowments of at least 500,000 dollars per student. Revenue would be deposited in the Treasury to reduce the national deficit and debt. The bill targets wealthy universities accumulating untaxed endowment gains.
Latest Action
Referred to the House Committee on Ways and Means.
AI Summary
Plain-English explanation of this bill
This bill dramatically increases the excise tax on large private university endowments from 1.4% to 21% of net investment income. The tax applies to private institutions with 500+ students and endowments of at least 500,000 dollars per student. Revenue would be deposited in the Treasury to reduce the national deficit and debt. The bill targets wealthy universities accumulating untaxed endowment gains.
Last updated: 1/4/2026
Official Summary
Congressional Research Service summary
<p><strong>Endowment Tax Fairness Act</strong></p><p>This bill increases the excise tax on the net investment income of certain private university and college endowments. </p><p>Under current law, certain private universities and colleges with 500 or more tuition-paying students (of which more than 50% are located in the United States) and endowments that are at least $500,000 per student pay an excise tax in the amount of 1.4% on the net investment income from such endowments.</p><p>The bill increases the amount of the excise tax to 21% of the net investment income from such university and college endowments. </p><p>Further, the bill provides that amounts collected from the increase to the excise tax on the net investment income from such university and college endowments are (1) to be deposited into the general fund of the Treasury; and (2) used to reduce the national deficit and, subsequently, the national debt. </p>
Key Points
Main provisions of the bill
Increases endowment tax from 1.4% to 21%
Applies to large private universities
Threshold: 500+ students, 500,000 dollars per student endowment
Revenue to reduce national deficit and debt
Targets wealthy university tax-exempt accumulation
How This Impacts Americans
Potential effects on citizens and communities
This represents a 15-fold increase in endowment taxation targeting elite universities. Supporters argue these institutions hoard wealth while receiving tax benefits and charging high tuition. The 21% rate matches the corporate tax rate. Critics contend it would reduce financial aid, research funding, and institutional investment. The targeting of universities reflects broader debates about nonprofit tax exemptions.
Policy Areas
Primary Policy Area
Taxation
Scope & Jurisdiction
Jurisdiction Level
federal
Congressional Session
119th Congress
Citation Reference
446, 119th Congress (2025). "Endowment Tax Fairness Act". Source: Voter's Right Platform. https://votersright.org/bills/118-hr-446
