Higher Education Accountability Tax Act
Sponsored By: Representative Joyce, David P. [R-OH-14]
Introduced
Summary
Raises the excise tax on private colleges' investment income and targets schools that raise net price faster than inflation. This bill would push taxable endowment income rates much higher and broaden which institutions owe the tax.
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- Colleges and universities with investment income would face a much higher base tax rate, rising from 1.4% to 10% on investment income. This directly increases the cost of holding large endowments for many private institutions.
- Institutions whose net price for students grows faster than inflation would pay an even higher excise tax rate of 20% on investment income. "Net-price-increase institutions" are defined by comparing a three-taxable-year change in net price to the Consumer Price Index.
- More institutions would be taxed because the current threshold for taxable investment income is lowered from $500,000 to $250,000. The bill also changes how net price is calculated to include all first-time, full-time undergraduates, not just those receiving aid.
- The rule would apply to taxable years beginning after December 31, 2024.
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Bill Overview
Analyzed Economic Effects
1 provisions identified: 0 benefits, 1 costs, 0 mixed.
Higher taxes on private college endowments
If enacted, this bill would raise the excise tax on private colleges' net investment income from 1.4% to 10%. Colleges whose net price rose faster than inflation over the prior three taxable years would face a 20% rate. Net price would be measured under the Higher Education Act method and would include all first-time, full-time undergraduates, not just aid recipients. The dollar threshold for which schools are covered would drop from $500,000 to $250,000. These changes would apply to taxable years beginning after December 31, 2024.
Sponsors & CoSponsors
Sponsor
Joyce, David P. [R-OH-14]
OH • R
Cosponsors
Rep. Malliotakis, Nicole [R-NY-11]
NY • R
Sponsored 2/5/2025
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov