TRADES Act
- Sponsor
- Sen. Moody, Ashley [R-FL]
- Committees
- Finance Committee (primary)
- Last action
- Jun 24, 2026
Bottom line
The TRADES Act seeks to redirect a portion of private university endowment investment income to enhance funding for career and technical education nationwide.
What it actually does
This bill, known as the TRADES Act, proposes to increase the excise tax on the net investment income of private colleges and universities from 8 percent to 15 percent. The additional revenue generated by this increase would then be annually transferred from the general fund of the Treasury to support State programs under the Carl D. Perkins Career and Technical Education Act of 2006. The amendments would apply to taxable years beginning 12 months after the date of enactment.
Proponents argue
Supporters argue that this bill addresses the growing disparity between the vast wealth accumulated by some private university endowments and the critical need for skilled trades and vocational training. They contend that increasing the excise tax on these endowments, particularly those with substantial assets, is a fair way to leverage institutional wealth for public good, directly funding programs that prepare Americans for in-demand jobs and strengthen the workforce.
Opponents contend
Opponents may argue that increasing the endowment tax could reduce the financial flexibility of private universities, potentially leading to higher tuition costs, reduced financial aid for students, or less investment in research and academic programs. They might also contend that endowments are already used to support institutional missions and that further taxation could harm their ability to serve students and communities, questioning the precedent of redirecting private institutional funds for other federal programs.
The bill is exceptionally short and clear, making it very accessible for any reader to understand its core provisions quickly.
Section 2(a)
Increase Excise Tax on Private University Endowments
This section amends the Internal Revenue Code to raise the excise tax rate on the net investment income of certain private colleges and universities. Specifically, it changes the tax rate from 8 percent to 15 percent. This tax applies to institutions with significant endowments, typically those with assets exceeding a certain threshold per student, as defined in existing law.
Supporters argue
Supporters argue that many wealthy private universities have accumulated substantial endowments, and a modest increase in the excise tax on their investment income is a reasonable way to ensure these institutions contribute more to broader public education goals, especially given their tax-exempt status. They contend that the current 8% rate is too low for institutions with billions in assets.
Critics contend
Opponents contend that endowments are critical for funding university operations, research, and student financial aid, and increasing this tax could force institutions to cut programs, raise tuition, or reduce aid, ultimately harming students and the academic mission. They argue that endowments are not simply 'savings accounts' but rather dedicated funds for long-term institutional stability and growth.
Tradeoffs
The provision balances the desire to leverage institutional wealth for public benefit against concerns about maintaining the financial autonomy and capacity of private universities to fulfill their educational and research missions, potentially impacting students through tuition or aid adjustments.
Section 2(b)
Dedication of New Revenue to Career and Technical Education
This section mandates that the additional revenue generated by the increased excise tax (from 8% to 15%) be annually transferred from the general fund of the U.S. Treasury to programs under Title I of the Carl D. Perkins Career and Technical Education Act of 2006. This ensures that the new tax revenue directly supports career and technical education (CTE) initiatives in States.