NTCA and Other Groups Seek Rural Broadband Tax Relief

Eight associations representing rural broadband providers, including NTCA – The Rural Broadband Association, wrote Congressional leaders late last week asking for a change in the tax code, which currently treats federal funds to promote broadband growth as taxable income. They asked that any coming broad tax legislation include the provisions of the proposed Broadband Grant Tax Treatment Act (BGTTA) (S. 341/H.R. 889).

Associations have long questioned the wisdom of taxing rural ISPs for grants they receive through the Broadband Equity Access and Deployment (BEAD) program and other federal broadband funding programs enacted in recent years. “Many challenges exist to closing the digital divide – tax policy should not be one of them,” the associations said. “This commonsense solution will make sure that several additional billion dollars of broadband funding will be used for that purpose instead of returning to the government as tax, a massive return on the bill’s $578 million cost.”

NTCA CEO Shirley Bloomfield went into more detail in a separate letter to Senate Finance Committee leaders. She referred to the Tax Relief for American Families and Workers Act (H.R. 7024), which reported out of the House Ways and Means Committee last week. If it passes the full House, H.R. 7024 could be under Senate consideration soon. Among its provisions, the bill would establish a 100 percent bonus depreciation, which would allow rural ISPs and other small businesses to depreciate certain qualifying assets immediately.

“While we, therefore, applaud the inclusion of this measure in the pending legislation, we believe [BGTTA] should likewise be seen as a critical component of any comprehensive tax legislation and passed by the Senate Finance Committee as well,” Bloomfield said. She noted that rural providers likely will deploy equipment during BEAD and other federally funded broadband projects after the bonus depreciation in H.R. 7024 expires. Without BGTTA, many rural ISPs could be left with no tax relief at all.

“Against this backdrop, we encourage you to include the ‘Broadband Grant Tax Treatment Act’ in the ‘Tax Relief for American Families and Workers Act.’ This bipartisan effort will maximize the impact of every dollar granted for broadband deployment and allow for more students, doctors, teachers, farmers, and first responders to be connected,” she said.

Members of the House and Senate from both sides of the aisle first introduced the BGTTA in the previous Congress as it passed the Infrastructure Investment and Jobs Act (IIJA) and the American Rescue Plan Act (ARPA) creating broadband support programs. They reintroduced it in February 2023 at the start of the current Congress. However, to date, there have been no hearings or other movement in either the House or the Senate.