# Plain Language Summary of H.R. 10400

This bill makes a technical change to how the government taxes wealthy private colleges and universities. Right now, there's a special tax that applies to private colleges and universities that have large endowments (money saved up over time). The tax is based on how much investment income these schools earn each year. This bill clarifies which schools have to pay this tax by specifying that only undergraduate students count toward determining whether a school is big enough to be subject to the tax.

Here's what that means in practical terms: The current tax rule looks at whether a school has at least 500 students paying tuition. The bill adds the phrase "below the graduate level" to make clear that only undergraduate students should be counted, not graduate or professional students. This is important because some wealthy universities have lots of graduate students but fewer undergraduates. By only counting undergraduates, fewer schools would likely qualify for this tax, and some schools that currently pay it might no longer have to.

The change takes effect for the 2025 tax year and beyond. For most regular people, this won't directly affect them unless they attend or work at a private college or university. However, if this bill passes, it could mean less tax revenue for the government from these institutions, which might affect federal funding for education programs or other government services. For the colleges themselves, it could mean lower tax bills if they fall below the threshold for this particular tax.

To amend the Internal Revenue Code of 1986 to clarify the definition of applicable educational institution for purposes of the excise tax based on the income of private colleges and universities.