The Trump administration released new Treasury Department rules Thursday that could revoke tax-exempt status from any school offering targeted support to Black or other minority students. The proposed regulations would deny tax-exempt status to any school — including secondary schools and universities — if the IRS finds its policies or programs, including admissions and scholarships, to be racially discriminatory. The rules apply to as many as 18,000 schools and take effect after May 31.

Trump officials view diversity initiatives as discrimination against white and Asian Americans, and federal civil rights lawyers have opened investigations into admissions policies at Harvard, Yale and other schools. The threat of losing tax-exempt status would tighten the financial squeeze from withheld federal research funding. While schools may not owe much in federal income taxes without the exemption, it is valuable because it allows donors to deduct donations, aiding fundraising.

Legal experts expect court challenges. Roger Colinvaux, a law professor at Catholic University of America, warned the rules open "the door to the weaponization of tax-exempt status." The regulations draw on a 1983 Supreme Court case upholding the IRS revocation of Bob Jones University's tax-exempt status over its ban on interracial relationships. Treasury Secretary Scott Bessent said schools "rebranding race-based preferences as equitable, inclusive or diversity-enhancing does not change their discriminatory nature."