Bipartisan legislation preventing taxation of Broadband Grants reintroduced

U.S. Sens. Mark Warner (D-VA) and Jerry Moran (R-KS) along with U.S. Reps. Mike Kelly (R-PA-16) and Jimmy Panetta (D-CA-19) reintroduced the Broadband Grant Tax Treatment Act) — legislation that would amend the Internal Revenue Code to ensure that funding for broadband deployment from the Infrastructure Investment and Jobs Act and the American Rescue Plan will not be considered taxable income.

This legislation was first introduced last Congress in both the Senate and the House of Representatives with bipartisan support. 

Grants awarded for the purposes of broadband deployment are currently factored into a company’s income and are subject to taxation. This bipartisan, bicameral legislation moves to exclude broadband deployment grants awarded through the IIJA, ARP, and Tribal Broadband Connectivity Fund from an organization’s income, ensuring the entirety of federal dollars awarded to companies for the purpose of deploying broadband around the country can be used wholly for that purpose, rather than making their way back to the government through taxes.

“We have made significant strides to ensure that access to high-speed internet is available to more Americans than ever,” said Sen. Warner, a member of the Finance Committee that oversees the nation’s tax code and a primary author of the broadband provisions in the IIJA and ARP. “But taxing broadband investment awards diminishes our efforts. This legislation ensures that individuals and businesses are able to reap the benefits of every dollar set aside for broadband expansion and deployment so that we can accomplish our goal of bringing reliable broadband to every corner of Virginia.”

“Reliable, high-speed internet is more crucial than ever for Kansans to run their businesses, access telehealth or pursue an education,” said Sen. Moran. “This commonsense legislation would make certain federal grants provided for broadband deployment are not counted as taxable income to maximize the impact and success of these resources.”

Joining Sens. Warner and Moran as co-sponsors are Sens. Tim Kaine (D-VA), Roger Wicker (R-MS), Rev. Raphael Warnock (D-GA), Kevin Cramer (R-ND), Joe Manchin (D-WV), Shelley Moore Capito (R-WV), Angus King (I-ME), James Risch (R-ID), Mark Kelly (D-AZ), Tommy Tuberville (R-AL), Kyrsten Sinema (I-AZ), Lisa Murkowski (R-AK), Bob Menendez (D-NJ), Michael Bennet (D-CO), and Tammy Baldwin (D-WI). Original co-sponsors in the House of Representatives are U.S. Reps. Terri Sewell (D-AL-07), Drew Ferguson (R-GA-03), Buddy Carter (R-GA-01), and Dan Kildee (D-MI-08).

“Access to high-speed internet is essential for telehealth, remote work, virtual learning, and more. The Bipartisan Infrastructure Law and American Rescue Plan made important investments to expand high-speed internet to more households in Virginia and across the country,” said Sen. Kaine. “Protecting these investments from being taxed will help ensure Virginians are getting the most out of these federal dollars.”

“When Congress funded grant programs to help deploy broadband in underserved states like West Virginia, it was intended for all of those funds to be used for exactly that purpose – for broadband deployment,” said Sen. Capito. “Taxing federal broadband grants as gross income undermines our intent for these programs and would further delay efforts to close the digital divide in areas that need broadband connectivity the most. I’m proud to join my colleagues to reintroduce this legislation, and will continue to work toward solutions that help us close the digital divide in West Virginia and rural America.”

“Rural communities are the backbone of our nation, and we want to ensure that Americans living in these communities have access to high-speed internet,” said Sen. Tuberville. “Taxing broadband grants would undermine federal efforts to prioritize rural broadband expansion. I am proud to support this legislation so that those living in rural America have internet needed to run their businesses, access healthcare, and pursue educational opportunities.”

Full text of legislation is available here.