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The United States Senate Finance Committee released proposed changes to the House’s sweeping tax and spending bill that would introduce an 8 percent on Harvard’s endowment, down from the 21 percent rate passed by the House
The revised legislation, part of a broader package President Donald Trump called the “One Big Beautiful Bill,” would still mark a sixfold hike from the current 1.4 percent tax.
Based on Harvard’s most recent financial returns — $2.5 billion in earnings in fiscal year 2024 — the University could owe roughly $200 million annually in taxes on its endowment earnings.
The proposal includes a graduated tax rate, with schools with less than $750,000 in endowment per student continuing to pay the current 1.4 percent tax. Harvard’s $53.2 billion endowment, and a per-student endowment of $2.9 million, would place it in the highest tax tier under the Senate proposal, along with eight other institutions: Princeton, Yale, MIT, Stanford, Caltech, Juilliard, Amherst, and Pomona.
The raised tax rate would not apply to religious universities founded after U.S. independence on July 4, 1776.
The Senate proposal also includes provisions aimed at preventing universities from restructuring their endowments to avoid the tax. The bill directs Treasury Secretary Scott Bessent to issue regulations to “prevent avoidance of the tax,” specifically targeting arrangements that would reduce taxable investment income.
The Senate Finance Committee’s proposal comes after weeks of closed-door negotiations and follows the House’s narrow passage of its own sweeping tax and spending bill last month by a single vote. Senator James P. Lankford (R-Okla.), a member of the Finance Committee, pushed for a decrease in the endowment tax earlier this month, according to reporting by Politico.
Because around 80 percent of Harvard’s endowment is restricted — meaning it cannot be reallocated by University officials — the tax would disproportionately impact University programs funded by unrestricted income. Unrestricted funding supports financial aid, research, faculty hiring, and other University operations, including building maintenance.
The current 1.4 percent excise tax on endowments was introduced in 2017 as part of the Tax Cuts and Jobs Act, signed into law by President Donald Trump. Harvard opposed the measure, with then-University President Drew G. Faust warning it could negatively impact research funding and student support.
Congressional Republicans — including Vice President J.D. Vance during his time in the Senate — have repeatedly proposed increasing the endowment tax on private universities over the past three years, though none of those efforts passed a chamber-wide vote until May.
In recent years, calls to raise the endowment tax have gained significant political momentum, prompting University President Alan M. Garber ’76 to describe the prospect as “the threat that keeps me up at night” during a faculty meeting last year.
With the endowment tax and other provisions of the 2017 Tax Cuts and Jobs Act set to expire this December, and with Republicans controlling both Congress and the White House, an increase in the tax rate was widely anticipated this year.
Harvard spent $230,000 on federal lobbying in the first quarter of 2025 — the highest total since 2008 — on issues including endowment taxation, student visas, and research funding.
University spokesperson Jason A. Newton wrote in a February statement that “raising the endowment tax would inflict harm directly on our students and faculty – it would diminish our institutional capacity to support financial aid and research, and it would impair our ability to hire and retain faculty.
Harvard has already sustained significant costs from federally-inflicted financial penalties, including more than $2.7 billion in research funding cuts and disqualification from future federal grants — which the University has gone to court to block.
Though Republican leaders are aiming to pass the legislation by July 4, the committee’s proposed language is not necessarily the final word, and the provision could still be in flux.
After other committees release the bill’s revised language, it will be voted on by the Senate, where a divided Republican caucus holds a narrow majority and will be confronted with other hot-button topics folded into the bill, including cuts to Medicaid and state and local tax deductions. Of the nearly 550 pages released by the Finance Committee, just five referenced the endowment tax.
Bessent has urged Congress to pass the bill by the end of July to avoid a debt default. Republicans have not indicated that they intend to pursue interim measures to lift the debt limit if they are unable to agree on final legislation before then.
—Staff writer Avani B. Rai can be reached at avani.rai@thecrimson.com. Follow her on X @avaniiiirai.
—Staff writer Saketh Sundar can be reached at saketh.sundar@thecrimson.com. Follow him on X @saketh_sundar.
