The WEST Act imposes a new 6 percent federal excise tax on the endowments of large private colleges and universities, effective for the 2025 tax year and beyond. The tax applies to non-religious private institutions with endowments of at least $11.9 billion and state-operated institutions with endowments of at least $10.5 billion, calculated based on the fair market value of assets not directly used for educational purposes. This legislation would affect a relatively small number of the nation's wealthiest universities, generating federal revenue from their investment holdings. The bill was introduced by Senator Tom Cotton in March 2025 and referred to the Senate Finance Committee. No specific revenue targets or sunset provisions are included in the bill text.
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