IRS Proposes New Racial Nondiscrimination Rules for Tax-Exempt Private Schools: What Your School Needs to Know

On September 4, 2026, the IRS and Treasury Department published proposed regulations (REG-119986-25) that would redefine the nondiscrimination standards every tax-exempt private school must meet under section 501(c)(3). If finalized, these rules could require meaningful changes to admissions policies, scholarship programs, endowments, and donor agreements at schools across the country. The regulations would apply to private primary, secondary, preparatory, or high schools, as well as colleges and universities for taxable years beginning after May 31, 2027.