# Broadband Grant Tax Treatment Act

This bill makes broadband grants tax-free for the people and organizations that receive them. Right now, when someone gets a government grant to help build or improve internet infrastructure, they have to count that money as income and pay taxes on it. This bill says they don't have to do that anymore—the grant money won't be considered taxable income.

The bill covers several different types of broadband grants that come from various government programs. These include grants from the major broadband expansion program created by the Infrastructure Investment and Jobs Act (the big infrastructure bill passed in 2021), grants from state and local governments that were funded through COVID relief money and designated for broadband projects, and grants from rural broadband programs. Basically, if you're a company, nonprofit, or local government receiving money specifically to build or expand internet access, you won't owe federal income tax on that grant money.

There's an important catch built into the bill to prevent people from getting a double benefit. If you receive a tax-free grant for a broadband project, you can't also claim a tax deduction or credit for the same expenses that the grant paid for. Additionally, if the grant helped pay for equipment or infrastructure, the value of that grant reduces the cost basis of the property for future tax purposes. This is a standard fairness rule—the government is essentially saying you can either exclude the grant from your income or claim deductions for those expenses, but not both.

The practical effect is that organizations receiving broadband grants will have lower tax bills, which could free up more money for them to actually invest in expanding internet service to underserved areas. The bill applies to grants received after March 11, 2023.

Broadband Grant Tax Treatment Act

Kelly, Mike

Broadband Grant Tax Treatment ActThis bill excludes from gross income (for federal tax purposes) certain grants received for broadband deployment.As background, contributions of capital to a corporation generally are not taxable income. However, under an exception enacted in 2017 by the Tax Cuts and Jobs Act, grants from a government or civic organization are not contributions to capital and, thus, treated as taxable income. Prior to the Tax Cuts and Jobs Act, the&nbsp;Internal Revenue Service (IRS) considered certain grants from a government or civic organization&nbsp;contributions of capital and, thus, not taxable income.The bill specifically excludes from gross income grants received for broadband deployment from the<ul><li>National Telecommunications and Information Administration (NTIA) Broadband Equity, Access, and Deployment Program;</li><li>NTIA State Digital Equity Capacity Grant Program;</li><li>NTIA Digital Equity Competitive Grant Program;</li><li>NTIA Enabling Middle Mile Broadband Infrastructure Program;</li><li>Department of Agriculture ReConnect Program;</li><li>Coronavirus State and Local&nbsp;Fiscal Recovery Funds&nbsp;and the Coronavirus Capital Projects Fund; and</li><li>NTIA Tribal Broadband Connectivity Program and the Broadband Infrastructure Program.</li></ul>The bill also requires the IRS to issue guidance on the exclusion from gross income of such grants.The bill applies to funds received in tax years ending after March 11, 2023.