MONTGOMERY, Ala. — A bill that would exempt Alabama’s sales and use tax on industry-level purchases of broadband infrastructure and equipment was filed recently by Rep. Matt Woods, R-Jasper, in an effort to accelerate Alabama’s $1.8 billion initiative to expand internet connectivity across the state.
House Bill 451 would exempt a broad range of broadband equipment and supplies from the state 4% sales and use tax, including fiber, antennas and poles, as well as equipment used to test or maintain broadband infrastructure such as power generators and storage devices. The bill would not apply to retail consumer electronics such as consumer-grade modems and WiFi routers.
“This legislation enhances Alabama’s ongoing commitment to expand broadband access statewide,” Woods told Alabama Daily News recently via a text message.
That commitment has been dubbed Be Linked Alabama, announced in late 2023 by Gov. Kay Ivey, who shared that $1.8 billion would be committed to expanding broadband access across Alabama over the coming years, particularly in the state’s more rural and underserved areas.
The announcement came hot off the heels of Alabama being awarded $1.4 billion in federal funds as part of the 2021 Infrastructure Act, which saw $42 billion set aside for states to expand broadband access.
“At a time when the state is dedicated to deploying broadband, imposing sales taxes on network components only increases costs and diminishes the impact of each investment dollar,” Woods told ADN. “With millions in federal funding aimed at accelerating broadband expansion in underserved areas, the bill seeks to maximize these resources and further bridge the digital divide that exists across our state.”
Alabama’s broadband expansion initiative is being administered by the Alabama Department of Economic and Community Affairs, which saw its plan for broadband expansion approved by the federal government last October.
The department ended its prequalification window for companies to be considered eligible for federal broadband expansion dollars in the first phase in late January, and has since published a list of pre-qualified broadband providers. The agency is expected to score applicants in the second quarter of this year, and open up a second phase of applications in the fall.
The cost to the state in lost tax revenue is likely to be significant considering the draw for corporations to invest in broadband expansion given the influx of federal dollars, however, a fiscal note has yet to be published for the bill, which is set to next be heard in the House Ways and Means Committee.
Alabama state lawmakers have invested heavily in recent years toward expanding broadband access, allocating more than $500 million in grants from both state and federal funds since 2018. As of late 2024, already-approved broadband expansion projects will connect an estimated 140,000 more homes, businesses and public facilities across more than 200 individual projects.