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Higher Education Accountability Tax Act
To amend the Internal Revenue Code of 1986 to modify the excise tax on investment income of private colleges and universities.
Summary
This act increases the federal excise tax on investment income of private colleges and universities from 1.4 percent to 10 percent, effective for taxable years beginning after December 31, 2024. It imposes an additional higher tax rate of 20 percent on "net-price-increase institutions," defined as institutions whose net student price increased faster than the Consumer Price Index over the preceding three-year period. The act expands the number of institutions subject to the tax by lowering the asset threshold from $500,000 to $250,000. For purposes of determining whether an institution qualifies as a net-price-increase institution, net price is calculated based on all first-time, full-time undergraduate students, not just those receiving student aid.
AI-generated plain-language summary of the bill text — neutral, and may be imperfect. See the full text below for the exact wording.
Sponsor (1)
1 cosponsor
Actions (2)
- Feb 5, 2025 Referred to the House Committee on Ways and Means. · house
- Feb 5, 2025 Introduced in House
Similar bills (6)
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Text versions (1)
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Full text
IN THE HOUSE OF REPRESENTATIVES
February 5, 2025
Mr. Joyce of Ohio (for himself and Ms. Malliotakis) introduced the following bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to modify the excise tax on investment income of private colleges and universities.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the “Higher Education Accountability Tax Act”.
SEC. 2. MODIFICATION OF EXCISE TAX ON INVESTMENT INCOME OF PRIVATE COLLEGES AND UNIVERSITIES.
(a) Increase in Rate of Tax.—Section 4968(a) of the Internal Revenue Code of 1986 is amended by striking “1.4 percent” and inserting “10 percent”.
(b) Additional Increase in Rate of Tax for Institutions With Increases in Net Price.—
(1) In general.—Section 4968(a) of such Code, as amended by subsection (a), is amended by inserting “(20 percent in the case of a net-price-increase institution)” after “10 percent”.
(2) Net-price-increase institution.—Section 4968(b) of such Code is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph:
“(2) Net-price-increase institution.—The term ‘net-price- increase institution’ means any applicable educational institution for any taxable year if, during the 3-taxable-year period ending with the taxable year immediately preceding such taxable year, the net price of such institution increased at a rate which exceeds the rate of increase in the Consumer Price Index (as defined in section 1(f)(5)) for such period. For purposes of the preceding sentence, the term ‘net price’ has the meaning given such term by section 132(a)(3) of the Higher Education Act of 1986 (20 U.S.C. 1015a(a)(3)) except that such price shall be determined by taking into account all first- time, full-time undergraduate students at the institution (in addition to such students who receive student aid).”.
(c) Expansion of Institutions Subject to Tax.—Section 4968(b)(1)(D) of such Code is amended by striking “$500,000” and inserting “$250,000”.
(d) Effective Date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2024. <all>
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