tag: Endowment tax

Currently, a set of the country’s wealthiest colleges and universities is subject to a 1.4 percent tax on net investment earnings. Over the past few months, several legislative proposals have taken aim at significantly increasing this tax, known colloquially as the “endowment tax.” The latest version, which was included in the reconciliation bill passed by the House in late May, includes a graduated rate structure that goes up to a 21 percent tax, depending on the size of the…

In 2017, the Tax Cuts and Jobs Act imposed a 1.4 percent excise tax on net investment earnings of a set of private colleges and universities that meet certain conditions. Currently, the excise tax applies to private colleges and universities that have at least 500 students and assets per student greater than $500,000, in practice reaching highly selective, high-endowment schools.[1] In 2023, 56 institutions were subject to the tax and paid a total of $380 million.[2] The stated…