Senate pushes for tax free BEAD grants: Why it matters

As we patiently wait for news on the Broadband Equity, Access and Deployment (BEAD) Program, the U.S. Senate is pushing for legislation that could make it less costly for rural ISPs to apply for BEAD. Or so the industry hopes. Sens Jerry Moran (R-KS) and Mark Warner (D-VA) led a bill that would amend the Internal Revenue Service code so federal broadband deployment funding would not be considered taxable income. Sounds straightforward enough, except Congress already tried to move such legislation forward - the Broadband Grant Tax Treatment Act -  both in 2022 and 2023. Neither of those bills went anywhere. Sadly, that's not surprising if you're familiar with the saga of trying to get more funding passed for the Affordable Connectivity Program. But here's why this newest bill matters. Federal broadband grants are currently subject to a 21 percent corporate tax rate, which wasn't the case until the passage of the 2017 Tax Cuts and Jobs Act. Previously, broadband grants were generally exempt from taxation, according to Keller and Heckman partner Casey Lide. However, that law amended IRS tax code so that “contributions to capital” made from the government or a non-profit can be taxable.