James Lynch writes for National Review Online about a key piece of the recently enacted One Big Beautiful Bill.
The new tax on large university endowments, passed as part of the GOP’s “big, beautiful bill,” is set to cost billions of dollars for the wealthiest U.S. universities.
An analysis from the right-leaning American Enterprise Institute found that over the next five years, Harvard University, Yale University, Princeton University, Stanford University, and the Massachusetts Institute of Technology will be on the hook for more than $1 billion apiece.
Harvard will have to pay $2 billion, the most of any university, between 2026 and 2030. Yale will be taxed at $1.5 billion, and Princeton will pay $1.2 billion, rounding out the top three. Stanford is going to face $1.1 billion in taxes, and MIT will pay $1 billion.
Several other prestigious universities, including the University of Notre Dame, the University of Pennsylvania, and Northwestern University, will have to pay hundreds of millions of endowment taxes over the coming years.
The endowment tax falls at 8 percent for schools that have endowments greater than $2 million in assets per student. Endowments with $500,000 to $750,000 of assets per student are taxed at 1.4 percent, and those between $750,001 and $2 million in assets per student are taxed at 4 percent.
AEI’s analysis estimates the universities’ taxable income based on publicly available tax forms and a calculation of taxable endowment returns. The calculation also relies on data to project the growth rate of the assets held by the universities. …
… The increased endowment tax follows years of advocacy from conservatives calling for taxes on college endowments to raise modest revenue and reduce the fortunes of left-wing educational institutions. Conservatives have also raised the alarm about tens of billions in foreign funding flowing to elite universities, especially from foreign adversaries such as China.
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Author: Mitch Kokai
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