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Congressional Research Service
Version 00 · Introduced in House · Mar 5, 2025
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.
Showing the opening paragraphs of the official summary.
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.
People & committees
Rep. Kelly, Mike [R-PA-16] · R–PA
Legislative record
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Referred to the House Committee on Ways and Means.
Introduced in House
Introduced in House
Primary sources
Text links open the official source. We also preserved the text version used in the PlainBill explanation below.
Source last updated: Sep 19, 2026. Consult Congress.gov for the current record.
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PlainBill explanation
Based on the full Introduced in House · 2025-03-05 text. This explanation has not received human editorial review. This overview describes the proposal’s major provisions; it does not establish what its real-world effects would be.
The proposed Broadband Grant Tax Treatment Act would exclude certain grants for building out broadband internet service from recipients’ gross income for federal income tax purposes. It covers grants from specified federal programs and certain federally funded grants distributed by other governments. Recipients could not also claim deductions or credits for expenses covered by the excluded amounts, and would have to reduce the tax value of related property.
This Act may be cited as the Broadband Grant Tax Treatment Act.
Gross income shall not include any qualified broadband grant made for purposes of broadband deployment.
any grant or subgrant received under the Broadband Equity, Access, and Deployment Program established under section 60102 of the Infrastructure Investment and Jobs Act
any grant received from a State, territory, Tribal government, or unit of local government to the extent such grant was— (A) funded by amounts provided to the State or local government under section 602, 603, or 604 of the Social Security Act, and (B) provided for the stated purposes of making investments in broadband infrastructure
no deduction or credit shall be allowed for, or by reason of, any expenditure to the extent of the amount excluded under subsection (a) for any qualified broadband grant which was provided with respect to such expenditure. The adjusted basis of any property shall be reduced by the amount excluded under subsection (a) which was provided with respect to such property.
Section 2 would add section 139J to the federal tax code. Its income exclusion would apply only to a qualifying broadband grant made for broadband deployment.
Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139I the following new subsection: 139J. Certain broadband grants (a) In general Gross income shall not include any qualified broadband grant made for purposes of broadband deployment.
Recipients could not claim a deduction or tax credit for an expense to the extent it was covered by an excluded grant amount. They would also have to reduce a property's adjusted basis—its value for tax calculations—by the excluded amount provided for that property.
Notwithstanding any other provision of this subtitle, no deduction or credit shall be allowed for, or by reason of, any expenditure to the extent of the amount excluded under subsection (a) for any qualified broadband grant which was provided with respect to such expenditure. The adjusted basis of any property shall be reduced by the amount excluded under subsection (a) which was provided with respect to such property.
Qualifying grants would include grants and subgrants under the Broadband Equity, Access, and Deployment Program and the State Digital Equity Capacity Grant Program. The definition would also include grants under the Digital Equity Competitive Grant Program and the infrastructure law's middle mile grant provision.
(1) any grant or subgrant received under the Broadband Equity, Access, and Deployment Program established under section 60102 of the Infrastructure Investment and Jobs Act, (2) any grant or subgrant received under the State Digital Equity Capacity Grant Program established under section 60304 of such Act, (3) any grant received under the Digital Equity Competitive Grant Program established under section 60305 of such Act, (4) any grant received under section 60401 of such Act (relating to middle mile grants)
Grants under the specified rural broadband loan and grant pilot program would qualify only if they came from the specified Infrastructure Investment and Jobs Act funding. This provision lists grants, not loans, as qualifying payments.
(5) any grant received— (A) under the broadband loan and grant pilot program established by section 779 of Public Law 115–141 under the Rural Electrification Act of 1936; and (B) from funds made available for such program under the heading Distance Learning, Telemedicine, and Broadband Program under the heading Rural Utilities Service under title I of division J of the Infrastructure Investment and Jobs Act
Grants from states, territories, Tribal governments, or local governments would qualify to the extent they used funds provided to a state or local government under sections 602, 603, or 604 of the Social Security Act and were expressly provided for broadband infrastructure investments.
(6) any grant received from a State, territory, Tribal government, or unit of local government to the extent such grant was— (A) funded by amounts provided to the State or local government under section 602, 603, or 604 of the Social Security Act, and (B) provided for the stated purposes of making investments in broadband infrastructure
The qualifying-grant definition would also include grants and subgrants received under section 905 of division N of the Consolidated Appropriations Act, 2021.
(7) any grant or subgrant received under section 905 of division N of the Consolidated Appropriations Act, 2021.
The proposal would require the Secretary to issue regulations or other guidance as necessary or appropriate to carry out the new tax provision.
(d) Regulations The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section.
The amendments would apply to amounts received in tax years ending after March 11, 2023. The test concerns when the tax year ends, rather than requiring that each payment itself arrive after that date.
(c) Effective date The amendments made by this section shall apply to amounts received in taxable years ending after March 11, 2023.
The supplied actions snapshot, updated September 19, 2026, records introduction in the House and referral to the House Committee on Ways and Means on March 5, 2025.
Source snapshot updated 2026-09-19T23:32:21Z. 2025-03-05: Referred to the House Committee on Ways and Means. 2025-03-05: Introduced in House
A closer look
Reviewed version: Introduced in House · 2025-03-05. These findings describe provisions and who may benefit; they are not judgments of waste, corruption, or motive.
This review covers the supplied bill text. “None identified” does not rule out provisions in later versions or accompanying reports and disclosures.
Provisions outside the bill’s main subject, or policy changes attached to appropriations.
None identified in the reviewed text
No unrelated provision or policy rider was identified in the complete supplied introduced text. This conclusion applies only to that version, not other versions or accompanying materials.
Spending directed to particular recipients or places outside ordinary competitive or formula-based allocation.
None identified in the reviewed text
No congressionally directed spending for a particular recipient or place was identified in the complete supplied introduced text. This conclusion is limited to that version and does not establish the absence of earmarks in other versions or accompanying materials.
Narrow exceptions, exemptions, or preferential treatment that warrant a closer look.
None identified in the reviewed text
No materially narrow preference beyond the main policy's intended grant recipients was identified in the complete supplied introduced text. Program coverage alone does not warrant a targeted-benefit finding. This conclusion applies only to that version.
Full text preserved for this analysis. Legislative record snapshot: Sep 19, 2026. How PlainBill uses AI