House Republicans are proposing major tax hikes for the wealthiest U.S. universities as part of a new bill released Monday to extend President Trump’s 2017 tax cuts.
Under the proposal, private colleges and universities with at least 500 students and endowments of more than $2 million per student would pay an increased tax rate of 21 percent on net investment income – a major increase from the current 1.4 percent rate.
Universities impacted could include Harvard, Princeton, Yale, MIT and Stanford, according to the 2024 NACUBO-Commonfund Study of Endowments.
Meanwhile, colleges with endowments between $750,000 to $1.25 million per pupil will pay a tax of 7 percent. Colleges with endowments between $1.25 million and $2 million per student would pay 14 percent.
The proposed plan comes amid a bitter battle between the Trump administration and several top universities.
The Trump administration is reviewing $9 billion in federal funding to Harvard and has already frozen at least $2.2 billion in grants and $60 million in contracts after the university rejected the White House antisemitism task force’s demands, which included screening international students to prevent the admission of antisemitic activists or terrorist sympathizers.
The Trump administration then said the university would no longer receive new federal research grants until it meets the task force’s demands to crack down on campus antisemitism and to retreat from its racially discriminatory diversity, equity, and inclusion policies.
In response, Harvard accused the government of trying to “impose unprecedented and improper control” over the school’s operations.
“Today’s letter makes new threats to illegally withhold funding for lifesaving research and innovation in retaliation against Harvard for filing its lawsuit on April 21,” a university spokesperson previously told National Review.
“Harvard will continue to comply with the law, promote and encourage respect for viewpoint diversity, and combat antisemitism in our community. Harvard will also continue to defend against illegal government overreach aimed at stifling research and innovation that make Americans safer and more secure.”
Earlier this month, Trump also threatened to revoke Harvard’s tax-exempt status. The university argued the president has “no legal basis” to do so.
The administration similarly paused dozens of federal grants to Princeton, canceled $400 million in grants and contracts to Columbia University, and suspended about $175 million in federal funding to the University of Pennsylvania.
The Trump administration said it canceled funding for UPenn in response to the university’s insistence on allowing men to compete in women’s sports.
Meanwhile, the House GOP bill, released by the House Ways and Means Committee on Monday, aims to slash taxes by more than $4 trillion and reduce spending by at least $1.5 trillion over a decade.
Trump’s so-called “One, Big, Beautiful Bill” would renew many of the president’s first-term tax cuts that are set to expire at year’s end, including a permanent extension on the 37 percent top rate for individuals.
While the draft calls for increasing the state and local tax deduction to $30,000 for both individuals and couples, an increase from the current $10,000 deduction, Politico reports that the SALT plan isn’t final and that the Ways and Means Committee will use placeholder language when it marks up the bill on Tuesday. Lawmakers representing high-tax areas want a larger tax break; they have proposed as much as $124,000 for joint filers.
The draft also makes good on Trump’s campaign promise to eliminate income taxes on tips and overtime pay through 2028.
House Speaker Mike Johnson told reporters that the House could pass the legislation by Memorial Day, after which it would head to the Senate where it could face significant revisions.