WEST Act Proposes 6% Tax on $11.9 Billion College Endowments, Exempting Religious Schools

The new Woke Endowment Security Tax Act of 2025 (WEST Act) is a straight shot at the balance sheets of the wealthiest private universities in the country. Starting in 2025, it introduces a new federal excise tax set at 6% of the total fair market value of an institution’s assets.

The Billion-Dollar Club Tax

This isn’t a tax that hits your local community college. The WEST Act targets only the absolute biggest players, creating two high-bar thresholds. The general rule applies to any non-religious private institution whose total assets hit at least $11.9 billion at the end of the prior tax year. If you’re a parent or student, this means the elite schools with endowments that dwarf the GDP of small countries are the ones footing this bill. For institutions that operate a campus on behalf of a state, the threshold is slightly lower, kicking in at $10.5 billion in assets. The tax is calculated on the total value of the endowment, not just the income it generates, making that 6% a significant annual hit for the schools that meet the criteria.

The Religious Exemption Carve-Out

Here’s where the policy gets particularly interesting: the bill includes a sweeping exclusion. Any institution that is considered “religious in nature” is completely exempt from this new 6% tax, regardless of how large its endowment is. This means a handful of extremely wealthy, religiously affiliated universities—some with endowments in the tens of billions—will not have to pay the tax, while their secular peers just over the asset threshold will. This creates a massive financial disparity in tax treatment based solely on institutional characterization, potentially putting secular institutions at a considerable disadvantage when competing for resources or trying to manage tuition costs.

What This Means for the Real World

If you’re a student or a parent paying tuition, the big question is whether this tax will change anything for you. The tax aims to extract significant revenue from the wealthiest institutions. However, the schools that get hit will have to find that 6% somewhere. They could dip into the endowment itself, which could slow down long-term growth for research and financial aid. Or, and this is the practical challenge, they might pass some of the cost along through higher fees or reduced spending on campus services. For the small number of institutions affected, the tax creates a new and substantial fixed cost that has to be managed, and those costs rarely just disappear; they get absorbed or redistributed. For the religious schools that are exempt, this bill is essentially a huge financial break, allowing them to continue growing their massive endowments tax-free while their peers face a new federal levy.