The Internal Revenue Service has scheduled a December public hearing on proposed regulations that would update federal tax-exemption rules governing racial nondiscrimination at private schools.
The hearing is scheduled for December 2, 2026, at 10 a.m. Eastern Time and will take place entirely by teleconference. It follows proposed regulations issued earlier this month by the Treasury Department and IRS under REG-119986-25.
The proposal would provide that a private school does not qualify for federal tax-exempt status under Section 501(c)(3) if it adopts, maintains, or enforces a policy or practice that discriminates on the basis of race, color, or national or ethnic origin.
Private Schools Already Face Nondiscrimination Requirements
The proposal isn’t creating the concept of racial nondiscrimination as a condition of tax exemption from scratch.
Current IRS guidance for tax-exempt organizations says a private school seeking federal tax-exempt status must have a racially nondiscriminatory policy toward students and cannot discriminate against applicants or students based on race, color, or national or ethnic origin.
Existing requirements also address admissions, scholarships, loans, school programs and athletics. Tax-exempt private schools generally must publicize their nondiscrimination policies and maintain certain records demonstrating compliance.
The Treasury Department and IRS say the proposed regulations would update those rules in light of Supreme Court decisions and establish a uniform nondiscrimination standard.
The Proposal Would Also Address Race-Based Preferences
One significant part of the proposal involves provisions of existing IRS guidance that have allowed certain policies favoring racial minority groups when their purpose and effect were to establish or maintain a school’s nondiscriminatory policy.
Treasury and the IRS propose eliminating those provisions, saying the exceptions are inconsistent with the uniform nondiscrimination standard contemplated by the new regulations.
Under the proposal, covered schools couldn’t make admissions decisions or provide benefits based on race, color, or national or ethnic origin. Schools could continue programs intended to expand educational opportunity using race-neutral criteria such as family income, geographic location, first-generation status, individual hardship, military-family status, or academic achievement.
The proposal also wouldn’t prevent private schools from maintaining religious missions or programs. Treasury and the IRS say religious schools could continue selecting students based on genuine religious affiliation or membership when consistent with federal law.
The agencies estimate that the regulations could affect as many as 18,000 private educational institutions, including private primary and secondary schools, colleges, universities, professional schools and trade schools.
December 2 Hearing Will Be Conducted by Telephone
According to the federal hearing notice, anyone wishing to testify must submit an outline of the topics they plan to discuss by November 3, 2026.
Each speaker will receive 10 minutes.
If the IRS receives no outlines by November 3, the hearing will be cancelled, and the agency will publish a cancellation notice.
People who want to attend without testifying must register by email by November 30 to receive the telephone number and access code. Requests for disability-related assistance must be submitted by November 27.
Testimony outlines can be submitted through the federal rulemaking portal by identifying IRS and REG-119986-25 or mailed to the IRS address provided in the official notice.
The Rules Wouldn’t Take Effect Immediately
The proposal remains just that—a proposal. The hearing and public-comment process occur before Treasury, and the IRS determines what will appear in final regulations.
The September 4 proposed regulations state that the new rules, if finalized as contemplated, would affect private schools for taxable years beginning on or after May 31, 2027.
That distinction is important for schools, families, and donors because the September proposal hasn’t itself changed the current requirements for tax-exempt private schools.
For donors, a school’s federal tax-exempt status can also matter when determining whether a charitable contribution qualifies for a federal income-tax deduction, subject to the applicable tax rules.
The December hearing gives schools, nonprofit organizations and other interested parties another opportunity to weigh in before the regulations are finalized. Written comments on the underlying proposal and requests for a public hearing are also due November 3.
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Amanda Blankenship is the Chief Editor for District Media. With a BA in journalism from Wingate University, she frequently writes for a handful of websites and loves to share her own personal finance story with others. When she isn’t typing away at her desk, she enjoys spending time with her daughter, son, husband, and dog. During her free time, you’re likely to find her with her nose in a book, hiking, or playing RPG video games.
