Both houses of Congress have pending bipartisan legislation designed to relieve the federal income tax burden on entities that receive federal broadband grants. The Broadband Grant Tax Treatment Act (the BGTTA), introduced in the House by Representatives Mike Kelly (R-PA-16) and Jimmy Panetta (D-CA-19), and in the Senate by Senators Mark Warner (D-VA) and Jerry Moran (R-KS), would amend the Internal Revenue Code to ensure that federal broadband deployment grant funding from the Infrastructure Investment and Jobs Act (IIJA) and the American Rescue Plan (ARP) is not considered taxable income.
Under the current code, federal broadband subsidies allotted to broadband providers for facility deployment are considered taxable income, requiring the return of as much as 20% of grant money back to the federal government, making that much unavailable for broadband facility deployment. The proposed tax exemption would ensure that all of the funding would go directly toward broadband deployment. The exemption would also apply retroactively to any qualified grant amounts received in taxable years 2021 and 2022.
The BGTTA has wide bipartisan support and is awaiting votes in both the House and Senate. Co-sponsors include Representatives Terri Sewell (D-AL-07), Drew Ferguson (R-GA-03), Buddy Carter (R-GA-01), and Dan Kildee (D-MI-08), and Senators 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).
Despite the broad support, is hard to see the BGTTA moving as a standalone bill, and thus it would likely need to be attached to a larger tax vehicle in order to pass. Given all the kerfuffle about the debt limit and general partisan animosity on fiscal issues, that is not likely to happen. That being said, if anything tax related does move in this Congress, the BGTTA would have a good shot for inclusion.
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