Modification of excise tax on investment income of private colleges and universities

(a) Increase in rate of tax Section 4968(a) of the Internal Revenue Code of 1986 is amended by striking 1.4 percent and inserting 10 percent. (b) Additional increase in rate of tax for institutions with increases in net price (1) In general Section 4968(a) of such Code, as amended by subsection (a), is amended by inserting (20 percent in the case of a net-price-increase institution) after 10 percent. (2) Net-price-increase institution Section 4968(b) of such Code is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph: (2) Net-price-increase institution The term net-price-increase institution means any applicable educational institution for any taxable year if, during the 3-taxable-year period ending with the taxable year immediately preceding such taxable year, the net price of such institution increased at a rate which exceeds the rate of increase in the Consumer Price Index (as defined in section 1(f)(5)) for such period. For purposes of the preceding sentence, the term net price has the meaning given such term by section 132(a)(3) of the Higher Education Act of 1986 (20 U.S.C. 1015a(a)(3)) except that such price shall be determined by taking into account all first-time, full-time undergraduate students at the institution (in addition to such students who receive student aid).. (c) Expansion of institutions subject to tax Section 4968(b)(1)(D) of such Code is amended by striking $500,000 and inserting $250,000. (d) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2024.