This bill adds a new section (139J) to the Internal Revenue Code to exclude certain broadband grants from gross income. The exclusion applies to specific federal and state grants used for broadband deployment, including grants under the Infrastructure Investment and Jobs Act (BEAD, digital equity, middle mile), certain Rural Utilities Service programs, some state and local grants funded by IIJA-related Social Security Act sections, and grants under the Consolidated Appropriations Act, 2021. The bill also says taxpayers cannot claim a deduction or credit for expenditures to the extent those expenditures were paid with excluded grant amounts and requires the taxpayer to reduce the adjusted basis of property by the amount excluded. The Secretary of the Treasury must issue guidance or regulations to carry out the section. The change applies to amounts received in taxable years ending after March 11, 2023.
If you or your organization received one of the listed broadband grants, the money described in this bill would not be counted as gross income for federal income tax. That means the grant itself would not be taxed as income. However, you may not also claim a tax deduction or credit for the same spending covered by the excluded grant, and you must lower the tax basis of any property by the excluded amount. The rule covers several named grant programs tied to broadband deployment and digital equity.
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