Summary

Creates a one-time federal excise tax equal to 6% of the fair market value of assets held by very large private college and university endowments. The tax applies to qualifying institutions for their first taxable year beginning in 2025 and uses asset thresholds to target only the largest endowments; certain religious institutions and smaller public arrangements are excluded by the thresholds and definitions carried forward from existing law.

• Creates a one-time 6% excise tax on the aggregate fair market value of assets held by very large private college and university endowments.
• Tax applies to the institution’s first taxable year beginning in 2025; law effective for taxable years starting after Dec 31, 2024.
• Targets nonreligious educational institutions with assets ≥ $11.9 billion, and state-operated colleges with assets ≥ $10.5 billion (excludes assets used directly for exempt purposes).
• Uses existing Internal Revenue Code definitions for assets and student by cross-reference to current endowment rules.
• Adds a new Internal Revenue Code section and updates the Subchapter H table without creating ongoing programmatic changes.
• Likely to raise federal revenue in a single year but does not specify use or distribution of proceeds.
• May prompt behavioral responses by affected institutions (asset reclassification, payout changes, legal challenges).
• Does not apply to most colleges and universities — thresholds limit effect to a small number of very large endowments.