Legislation introduced to prevent taxation of broadband grants

U.S. Sens. Mark Warner (D-VA) and Jerry Moran (R-KS), joined by Sens. Tim Kaine (D-VA), Roger Wicker (R-MS), Rev. Raphael Warnock (D-GA), and Shelley Moore Capito (R-WV), introduced the Broadband Grant Tax Treatment Act — legislation to amend the Internal Revenue Code to ensure that funding directed for the implementation of broadband from the Infrastructure Investment and Jobs Act and the American Rescue Plan  will not be considered taxable income.

Grants awarded to industry for the purposes of broadband deployment are currently factored into a company’s income and will soon be subjected to additional taxes due to scheduled changes to the corporate tax code that kick in beginning next year—unless Congress acts now to address the problem.

This new bipartisan legislation moves to exclude broadband deployment grants awarded through the IIJA and ARP 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.

“In order to fully reap the benefits of the Infrastructure Investment and Jobs Act and the American Rescue Plan, every dollar that was set aside to fund broadband expansion and deployment should be used for that purpose,” 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. “Taxing these broadband investments awards would be counterproductive, and could ultimately diminish efforts to give more Americans access to high-speed internet.”

“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.”

“The pandemic underscored the need for everyone to have a high-speed internet connection—which is why Congress stepped up to help more households get connected through the American Rescue Plan and Bipartisan Infrastructure Law,” said Sen. Kaine. “Ensuring that those investments won’t be taxed will help speed our progress toward that goal and expand access to online learning tools, remote work opportunities, and telehealth services.” “Many underserved communities will soon see the benefits of new federal investments in internet infrastructure, but new federal tax changes would reduce the grants’ reach,” said Sen. Wicker. “Broadband providers that are trying to close the digital divide should not be hit with tax penalties.”