Trump Threatens to Strip Harvard’s Tax-Exempt Status

President Donald Trump issued a public threat on April 15 to revoke Harvard’s tax-exempt status, following the university’s refusal to comply with a series of government demands.

The threat came just one day after the administration announced it would freeze over $2 billion in federal funding allocated to the Ivy League institution, intensifying an already contentious conflict.

On social media, Trump criticized Harvard for what he described as promoting “political, ideological, and terrorist inspired/supporting ‘Sickness,’” and suggested that the university should be taxed “as a Political Entity” if it continues its current stance.

While Harvard’s status as a nonprofit exempts it from federal income taxes—saving the university hundreds of millions annually—the president does not have unilateral authority to revoke this designation. However, the Internal Revenue Service (IRS) can rescind a nonprofit’s tax-exempt status if it is found to be operating outside its charitable purpose, and recent legislative proposals have sought to grant the president and Treasury Secretary broader powers in this area.

The threat marks a significant development in the ongoing dispute between Harvard and the federal government. Harvard’s leadership publicly rejected the administration’s demands, which included prohibitions on mask mandates and the elimination of diversity, equity, and inclusion initiatives.

Harvard’s legal team emphasized that the university would not surrender its independence or constitutional rights, asserting that the government’s demands exceeded lawful authority and threatened the university’s autonomy.

This confrontation follows a broader pattern of conflict, as the Trump administration has targeted several elite institutions over perceived political activities. Notably, Harvard’s response to the government’s demands led to the revocation of over $2.2 billion in federal grants and contracts, including funding for research and academic programs.

The administration’s move was justified by claims of rising antisemitism on campus following pro-Palestinian protests related to the Israel-Hamas conflict, with the Justice Department’s "Joint Task Force to Combat Anti-Semitism" citing concerns over campus hostility.

Legal challenges have already emerged, with Harvard faculty filing lawsuits against the administration’s review of nearly $9 billion in contracts and awards. The university’s endowment, valued at over $50 billion, and its status as a tax-exempt organization under section 501(c)(3) of the Internal Revenue Code, provide significant financial benefits, including exemption from property taxes and the ability to issue tax-free bonds. Harvard’s tax benefits, estimated at over $465 million in 2023, are crucial for funding its operations, research, and financial aid programs.

Legal experts note that the IRS’s authority to revoke tax-exempt status hinges on whether Harvard is found to be engaging in political activities or activities inconsistent with its charitable purpose. The Trump administration’s threats have raised concerns within higher education circles about potential overreach and the politicization of nonprofit status.

While Harvard has yet to face formal revocation, the situation underscores the increasing pressure on elite universities amid broader debates over tax policy, academic independence, and political influence.

As the dispute continues, Harvard remains firm in its stance to defend its independence and mission. The university’s leadership has signaled that it will resist government efforts to dictate its policies, emphasizing its role as a private institution committed to academic freedom.

The outcome of this standoff could have lasting implications for the future of nonprofit higher education and the scope of presidential authority over tax-exempt organizations.