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Broadband Grant Tax Treatment Act
4/1/2025, 8:05 AM
Summary of Bill HR 1873
The purpose of this bill is to incentivize the expansion of broadband access in underserved and rural areas by providing tax relief to those who are working to improve internet connectivity. By excluding these grants from gross income, it would make it more financially feasible for companies and organizations to invest in broadband infrastructure projects.
The bill does not specify the exact criteria for which broadband grants would be eligible for this tax exclusion, but it is likely that it would apply to grants that are specifically designated for broadband development and expansion. Overall, the Broadband Tax Exclusion Act is aimed at promoting the expansion of broadband access in areas that currently lack adequate internet connectivity, by providing tax relief to those who are working towards this goal.
Congressional Summary of HR 1873
Broadband Grant Tax Treatment Act
This 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 Internal Revenue Service (IRS) considered certain grants from a government or civic organization contributions of capital and, thus, not taxable income.
The bill specifically excludes from gross income grants received for broadband deployment from the
- National Telecommunications and Information Administration (NTIA) Broadband Equity, Access, and Deployment Program;
- NTIA State Digital Equity Capacity Grant Program;
- NTIA Digital Equity Competitive Grant Program;
- NTIA Enabling Middle Mile Broadband Infrastructure Program;
- Department of Agriculture ReConnect Program;
- Coronavirus State and Local Fiscal Recovery Funds and the Coronavirus Capital Projects Fund; and
- NTIA Tribal Broadband Connectivity Program and the Broadband Infrastructure Program.
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.
