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As the school’s famous fight song goes, “Fair Harvard holds sway”—just not with the U.S. president.
Harvard is the oldest and richest university in the U.S., but the Ivy League is feeling the heat from the federal government like never before.
After the university rejected his administration’s demands, President Donald Trump threatened to tax Harvard as a “political entity,” following his move to freeze $2.2 billion in federal funding to the school. He doubled down on his ultimatums three weeks later, insisting that Harvard losing its tax-exempt status was “what they deserve.”
By the end of June, the administration threatened all of Harvard University’s federal funding after it said it found the university to be in “violent violation” of the Civil Rights Act.
In a letter sent to Harvard’s president on Monday, the Department of Health and Human Services Office for Civil Rights shared its findings of an investigation into antisemitism on the campus. The investigation found that Harvard was in violation of Title VI, which prohibits discrimination based on race, color, or national origin.
If Harvard does lose its funding and, by extension, its tax-exempt status, the school would be on the hook for nearly $500 million, including property taxes. Could the most notable university in the country survive such a hit?
Harvard’s tax-exempt status
Right now, Harvard University pays $0 in property taxes to the city of Boston.
It is among the 1,700 colleges and universities that are exempt from federal income taxes. Along with other organizations, like charities and religious institutions, Harvard enjoys exemptions under the tax code 501(c)(3).
“To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual,” according to the IRS.
“In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.”
It’s under this stipulation that Trump believes he has the grounds to strip the university of its tax-exempt status. There is no public evidence of Harvard violating IRS rules.
“Perhaps Harvard should lose its Tax Exempt Status and be Taxed as a Political Entity if it keeps pushing political, ideological, and terrorist inspired/supporting ‘Sickness?’ Remember, Tax Exempt Status is totally contingent on acting in the PUBLIC INTEREST!” Trump wrote on April 15.
Three weeks later, after Harvard refused to bow to his demands, the president posted again.
“We are going to be taking away Harvard’s Tax Exempt Status. It’s what they deserve!” he warned on Truth Social on May 2.
Soon after, the Trump administration froze about $3 billion in grants and contracts with Harvard, including in a letter this week ordering federal agencies to cancel any remaining contracts with the university.
And then the critical blow came just before July 4, with the administration accusing the university of violating Title VI of the Civil Rights Act of 1964 by “acting with deliberate indifference towards harassment of Jewish and Israeli students” after the Oct. 7 attack.
In the letter from HHS to Harvard President Alan Garber, the “failure to institute adequate changes immediately will result in the loss of all federal financial resources.”
In response, Harvard once again condemned the Trump administration’s threats to strip it of federal funds and defended its work to combat alleged antisemitism.
“Harvard is far from indifferent on this issue and strongly disagrees with the government’s findings,” a Harvard spokesperson wrote in a statement to ABC News.
“Harvard has made significant strides to combat bigotry, hate and bias. We are not alone in confronting this challenge and recognize that this work is ongoing. We remain committed to ensuring members of our Jewish and Israeli community are embraced, respected, and can thrive at Harvard,” the statement added.
Harvard’s status as a nonprofit means it avoids levies on $4 billion worth of buildings and land in Boston and $8.7 billion in Cambridge that currently aren’t subject to property taxes.
Should Trump follow through with his threat, a Bloomberg News analysis estimates that Harvard’s tax burden would total at least $465 million, after reviewing its benefits in 2023.
Harvard vs. the Republican Party
On April 14, Harvard publicly rejected demands from the Trump administration, putting $9 billion in federal funding at risk.
On the previous Friday, the Trump administration sent a detailed letter to Garber, outlining demands the university would have to satisfy to maintain its funding. These demands included the immediate shuttering of all diversity, equity, and inclusion programs, including in hiring and admissions, as well as restricting the acceptance of international students whom they deem “hostile to the American values and institutions.”
Garber defied the president’s demands in a public letter to the Harvard community.
“The University will not surrender its independence or relinquish its constitutional rights,” Garber wrote in his message.
“No government—regardless of which party is in power—should dictate what private universities can teach, whom they can admit and hire, and which areas of study and inquiry they can pursue.”
This is not the first time Harvard’s administration has had to defend the school’s autonomy. Republicans for years have claimed that elite schools like Harvard should lose their tax-exempt classification.
When he was an Ohio senator, Vice President J.D. Vance called Harvard a “woke social-justice hedge fund” and led a bill that would have increased the tax on endowment investment gains for elite universities. It was blocked by Democrats.
Additionally, before recent events, several members of Congress threatened to reconsider schools’ tax-exempt status over the increase in protests of the Israel-Gaza War. Harvard is among the schools specifically accused of failing to adequately protect Jewish students from antisemitic discrimination and harassment.
Harvard’s endowment and its property taxes
Harvard’s endowment is valued at $53.2 billion as of June 30, 2024. While it stands as the world’s largest university endowment, the school relies on its tax-exempt status to maintain it.
The university’s tax-exempt status allows Harvard to save 15% to 35% of its taxable income, sell bonds that pay interest without federal tax, and avoid paying traditional taxes on educational properties, according to Bloomberg.
Harvard has three campuses in Massachusetts, including the 209-acre Harvard Yard in Cambridge. Bloomberg estimates that exemptions saved the university $158 million on its property tax bills in Boston and Cambridge in 2023.
It should be noted, however, that in March 2025, Harvard made changes to contribute more funds to the community. The university agreed to voluntarily pay the city of Cambridge $6 million through the Payment in Lieu of Taxes (PILOT) program. PILOT programs are agreements by large nonprofit institutions to pay the city a fraction of what they would otherwise hand over in property taxes. The pledge was an increase from its annual $4.7 million contribution.