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ARTICLE · 06 OCTOBER 2025

Endowment Tax Changes: Secondaries Market Implications In 2025 And Beyond

Ropes & Gray LLP
Ropes & Gray LLP
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Ropes & Gray LLP

Ropes & Gray LLP

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As we head into the fourth quarter of what has already been a busy year in the secondaries market, we wanted to revisit a topic from the summer that may impact sales activity: the endowment tax regime.

United StatesWealth Management
Isabel K.R. Dische
Isabel K.R. Dische
Robert Schmidt
Robert Schmidt
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As we head into the fourth quarter of what has already been a busy year in the secondaries market, we wanted to revisit a topic from the summer that may impact sales activity: the endowment tax regime.

Enacted in July, "The One Big Beautiful Bill Act" provided for increased taxation on certain private college and university endowments for tax years starting after December 31, 2025. Ropes & Gray has commented on this legislation throughout its evolution and implementation (see notes here, here, here and here). As a refresher:

  • The "endowment tax" applicable to private college and university endowments under Code Section 4968 was introduced in 2017 and is currently a flat 1.4% tax applied to net investment income for schools that meet certain criteria, including having at least 500 students and investment assets per student of at least $500,000. Approximately 56 universities have been subject to the endowment tax in recent years.

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