Sponsors (9)
The bill improves IRS ability to calculate and fairly apply the private-college endowment excise tax by clarifying rules and requiring standardized student-count reporting, but it increases compliance and reporting costs for colleges and may shift excise-tax liabilities and federal revenue modestly.
Private colleges and the IRS will get clearer, standardized student‑count rules and required reporting, which makes calculation of the section 4968 endowment excise tax more administrable and reduces disputes over assessments.
Some private colleges will be able to exclude students ineligible under HEA §484(a)(5) from the endowment-size student count, lowering those institutions' risk of triggering or increasing the excise tax.
Students, taxpayers, and institutions may benefit from greater transparency leading to a fairer and more consistent application of the excise tax across institutions.
Private colleges and universities must spend time and resources to verify HEA §484(a)(5) eligibility and collect/report additional student-count data, increasing compliance and recordkeeping costs for institutions.
If reporting reveals larger taxable bases (or if many students remain eligible), some institutions could face higher excise-tax bills or increased scrutiny, potentially diverting funds away from programs or tuition relief and affecting students.
Excluding certain students from the taxable count could modestly reduce revenue from the section 4968 excise tax, affecting federal receipts paid by taxpayers.
Based on analysis of 3 sections of legislative text.
Excludes students ineligible under HEA 484(a)(5) from the student count used to compute the private college endowment excise tax and requires institutions to report headcounts before and after the exclusion.
Changes how the private college and university endowment excise tax is calculated by excluding from the relevant student headcount any student who does not meet the federal student‑eligibility rule in HEA 484(a)(5). It also requires affected educational institutions to report the student counts used in that calculation before and after the exclusion. The changes apply to taxable years beginning after December 31, 2025.
Introduced March 6, 2025 by Vernon G. Buchanan · Last progress March 6, 2025