Higher Education Accountability Tax Act

The "Higher Education Accountability Tax Act" proposes substantial changes to the excise tax levied on the investment income of private colleges and universities. It aims to increase the base tax rate from the current 1.4 percent to 10 percent for applicable educational institutions. Furthermore, the bill introduces an escalated tax rate of 20 percent for institutions designated as "net-price-increase institutions." This designation applies if an institution's net price for students has risen faster than the Consumer Price Index over a three-year period, with the definition of "net price" expanded to include all first-time, full-time undergraduate students. To broaden the scope of institutions subject to this tax, the legislation also reduces the endowment per student threshold from $500,000 to $250,000 . These amendments are slated to take effect for taxable years beginning after December 31, 2024.