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Last progress June 12, 2025 (8 months ago)
Introduced on June 12, 2025 by John Peter Ricketts
Imposes new excise taxes on certain investments held by large private colleges and universities. It creates a tax on newly acquired “listed investments” equal to 50% of their fair market value and a tax equal to 100% of one-year net income and gains from listed investments; Treasury and Commerce must create and maintain lists and guidance to implement the rules and the section sets procedures and effective dates for the rules.
Adds new Internal Revenue Code section 4969 titled “Excise tax on certain investments of private colleges and universities.”
Imposes a tax equal to 50 percent of the fair market value of any "listed investments" acquired (directly or indirectly through any chain of ownership) by a specified educational institution during a taxable year.
Imposes a tax equal to 100 percent of the excess (if any) of (A) income received with respect to any 1-year listed investment plus gains recognized on sales of 1-year listed investments over (B) deductions properly allocable to that income plus losses recognized on sales of 1-year listed investments.
Defines "1-year listed investment" as any listed investment that was a listed investment for the entire 1-year period ending on the date the income was received or the gain/loss recognized.
Defines "listed investment" as any specified interest with respect to any person listed on one or more of: (A) the Commerce Department Entity List, (B) the Commerce Department Military End User (MEU) List, (C) the Commerce Department Unverified List, or (D) the FCC list of equipment and services covered by section 2 of the Secure and Trusted Communications Networks Act of 2019 (FCC Covered List).
Primary effect: large private colleges and universities with endowments or investment portfolios designated by the statute. Those institutions will face new excise taxes on the identified "listed investments," which may reduce after‑tax returns on affected portions of endowments. Institutions may respond by shifting asset allocations away from taxed investment types, extending holding periods, changing liquidity strategies, or restructuring investment vehicles to limit exposure. Secondary effects: endowment fund managers, external asset managers, private investment funds, and financial firms that advise or hold listed investments for colleges will need to change recordkeeping, reporting, and portfolio construction to comply; they may incur higher administrative and compliance costs. Students and campus programs could be indirectly affected over time if institutions earn lower net returns on investments that previously funded scholarships, research, or operations. The Treasury and Commerce Departments will bear implementation and enforcement responsibilities, requiring resources for rulemaking, guidance, audits, and valuation standards. Because many definitions and the precise lists are delegated to agencies, uncertainty during rulemaking could prompt market adjustments and legal challenges over scope, valuation, and retroactivity.
Read twice and referred to the Committee on Finance.
Updated 1 week ago
Last progress July 16, 2025 (6 months ago)