SALT Write-Off, Harvard Tax, Medicaid Cuts: What’s in Trump’s Bill

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Some private universities would face a dramatic tax increase on investment income generated by their endowments, posing a serious penalty to some of the nation’s wealthiest schools.

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The provision would create a tiered system of taxation so that colleges and universities that meet a threshold based on the number of students would pay more. Under Trump’s 2017 tax law, some colleges with the most well-funded endowments currently pay a 1.4% tax on their net investment income. The levy would rise to as high as 21% on institutions with the largest endowments based on their student population.

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The provision is a major escalation in Trump’s fight with Harvard and other elite colleges and universities, which he has sought to strong-arm into making curriculum and cultural changes that he favors. Harvard, Yale, Stanford, Princeton and MIT would face the maximum 21% tax rate based on the size of their endowments in 2024, according to data from the NACUBO-Commonfund Study of Endowments.

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Private Foundation Tax

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Private foundations also would face an escalating tax based on their size: 2.78% for private foundations with assets between $50 million and $250 million, 5% for entities with assets between $250 million and $5 billion; and 10% for foundations with assets of at least $5 billion, such as the Gates Foundation, a longtime target for Republicans.

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Sports Teams

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The bill would limit write-offs for professional football, basketball, baseball, hockey and soccer franchises that claim deductions connected to the team’s intangible assets, including copyright, patents or designs.

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Electric Vehicles

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A popular consumer tax credit of up to $7,500 for the purchase of an electric vehicle would be fully eliminated by the end of 2026, and only manufacturers that have sold fewer than 200,000 electric vehicles by the end of this year would be eligible to receive it in 2026. Tax incentives for the purchase of commercial electric vehicles and used electric vehicles would also be repealed.

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Renewable Tax Credits

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The legislation would cut hundreds of billions of dollars in spending by gutting a slew of clean energy tax incentives for clean electricity production. The bill would end technology-neutral clean electricity tax credits for sources including wind and solar starting in 2029.

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It would also hasten more stringent restrictions that would disqualify any project deemed to benefit China from receiving credits. Those limits, which some analysts have said could render the credits useless for many projects, would kick in next year.

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The legislation would also extend through 2031 tax credits for the production of biofuels.

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Bonus for Elderly

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Americans 65 and older who don’t itemize their taxes would get a $4,000 bonus added to their standard deduction through 2028. That benefit would phase out for individuals making more than $75,000 and couples making more than $150,000. It would be retroactive to the beginning of this year.

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Trump had campaigned on ending taxes on Social Security benefits, but that proposal would have run afoul of a special procedure Republicans are using to push through the tax-law changes without any Democratic votes. The higher standard deduction is an alternative way of targeting a benefit to the elderly but doesn’t fully offset Social Security taxes paid by many seniors.

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Targeting Immigrants

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Immigrants would face a new 3.5% tax on remittances sent to foreign nations. Many immigrants send a portion of their earnings abroad to support family members in their home countries. Tax credits would be available to reimburse US citizens who send payments abroad.

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Factory Incentives