SB 936, the “Woke Endowment Security Tax Act of 2025” or “WEST Act of 2025,” would amend the Internal Revenue Code to impose a new 6 percent excise tax on the endowment assets of certain large private colleges and universities. The tax would apply to specified applicable educational institutions beginning with the first taxable year starting in 2025, based on the fair market value of assets held at the end of the prior year.
The bill targets two categories of institutions: private colleges and universities with at least $11.9 billion in endowment assets, excluding assets directly used for exempt purposes, and institutions that operate a college on behalf of a state under statute or contract if their endowment assets reach at least $10.5 billion. Religious institutions are excluded from the tax. The bill also incorporates existing Internal Revenue Code definitions and rules for assets and students from section 4968, and it would apply to taxable years beginning after December 31, 2024.
Impact
If enacted, the bill would create a new federal excise tax provision in chapter 42 of the Internal Revenue Code, adding section 4969 and updating the table of sections accordingly. The practical effect would be to reduce after-tax endowment resources at a small number of very wealthy private higher-education institutions, potentially affecting investment returns, financial aid budgets, capital projects, and operating spending. It would also establish a new tax distinction between religious and nonreligious institutions and between extremely large private endowments and other educational institutions.
Sentiment
The available record shows no committee transcript, vote tally, or recorded floor debate, so there is no direct evidence of bipartisan support or opposition in the provided materials. The bill’s title and structure suggest a strongly critical posture toward large university endowments, especially at elite private institutions, and it appears designed to appeal to concerns about institutional wealth and ideology. Because it was only read twice and referred to the Finance Committee, the bill appears to be at an early stage with sentiment not yet formally tested through committee action or votes.
Contention
The main points of contention are likely to be the policy rationale for taxing endowments, the size of the tax rate, and the high asset thresholds that would apply only to a very small set of institutions. Supporters would likely argue that large, wealthy universities should contribute more in taxes, while opponents may contend that the tax would penalize charitable educational assets, reduce funds for scholarships and research, and interfere with institutional autonomy. The exclusion for religious institutions and the bill’s framing around “woke” endowments may also raise concerns about viewpoint-based targeting and unequal treatment among similarly situated schools.
Making appropriations for the fiscal year 2026 to provide for supplementing certain existing appropriations and for certain other activities and projects
Endowment Tax Fairness ActThis bill increases the excise tax on the net investment income of certain private university and college endowments. Under current law, certain private universities and colleges with 500 or more tuition-paying students (of which more than 50% are located in the United States) and endowments that are at least $500,000 per student pay an excise tax in the amount of 1.4% on the net investment income from such endowments.The bill increases the amount of the excise tax to 21% of the net investment income from such university and college endowments. Further, the bill provides that amounts collected from the increase to the excise tax on the net investment income from such university and college endowments are (1) to be deposited into the general fund of the Treasury; and (2) used to reduce the national deficit and, subsequently, the national debt.