Trump threatens Harvard’s tax-exempt status after university defies his demands

President Donald Trump threatened to revoke Harvard University’s tax-exempt status after the school refused to comply with a list of demands that would align itself more with Trump’s agenda.

In a Truth Social post on Tuesday, Trump continued to intimidate the Ivy League university for rejecting the government’s list of requests – just hours after the administration slashed $2.2 billion in federal funding for the school.

“Perhaps Harvard should lose its Tax Exempt Status and be Taxed as a Political Entity if it keeps pushing political, ideological, and terrorist inspired/supporting ‘Sickness?’ Remember, Tax Exempt Status is totally contingent on acting in the PUBLIC INTEREST!” Trump wrote.

The president’s threat is just the latest in what’s shaping up to be a power struggle over the school’s right to act independently from Trump’s agenda.

Trump is holding crucial federal funding over the heads of higher education institutions in an attempt to compel schools to adopt a list of demands that include ending diversity, equity and inclusion policies, complying with the Department of Homeland Security, reducing the power of students and faculty, cracking down on student protests and more.

On Monday, lawyers for Harvard rejected the administration’s demands, saying they go “beyond the lawful authority of this or any administration.”

“The university will not surrender its independence or relinquish its constitutional rights. Neither Harvard nor any other private university can allow itself to be taken over by the federal government,” the letter stated.

As a result, the school lost a chunk of the approximately $9 billion in funding that the government provides. That funding is the school’s largest source of research support.

Harvard is the oldest and richest U.S. university, with a $53 billion endowment and the school’s tax-exemption status is important for it to maintain a higher endowment.

It allows the school to save 15 to 35 percent of its taxable income, sell bonds that pay interest without federal tax and avoid paying traditional taxes on educational buildings or properties, according to Bloomberg. An analysis from Bloomberg News estimates that Harvard’s tax benefits totaled at least $465 million in 2023.

Most colleges and universities are tax-exempt from federal income taxes. Other organizations such as charities, religious institutions and some political organizations enjoy tax exemptions as well under the same tax code, 501(c)(3).

Organizations can lose their status if they are involved in political campaign activity or participate in substantial lobbying. The IRS is the entity that enforces tax laws.