Higher Taxes on University Endowments: More Colleges Subject to Investment Tax.
This bill significantly increases the excise tax rate on the investment income of wealthy private colleges and universities, raising it from 1.4% to 10%. It also lowers the asset threshold required to trigger this tax, meaning a larger number of institutions will now be subject to it. The goal is to encourage these institutions to use their substantial endowments to benefit students, potentially through lower tuition or increased financial aid.
Key points
The excise tax on private university endowment investment income is increased from 1.4% to 10%.
The number of institutions subject to the tax is expanded by lowering the asset-per-student threshold from $500,000 to $200,000.
These tax changes will apply to taxable years beginning after the law is enacted.
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