HR6335-119

What This Bill Does

The Education Not Endless Scrolling Act creates a new Internal Revenue Code excise tax on very large digital advertising hosts. A covered taxpayer is a person in the business of hosting digital advertising services with at least 2.5 billion dollars in U.S. digital-advertising gross receipts in the preceding taxable year. For taxable years after December 31, 2025, the tax equals 50 percent of receipts above that threshold. Digital advertising services include banner ads, search ads, interstitial ads, sponsored shopping, sponsored search results, and comparable ads on websites or apps. Treasury must issue implementing rules, including penalty rules for businesses that deliberately advertise or promote VPN use to evade the tax. The bill then creates three Treasury trust funds. One-third of the tax revenue goes to a Local Journalism Preservation Trust Fund, where money is reserved until Congress creates credits for local journalism hiring or small-business advertising in local news outlets. One-third goes to a One-on-One Tutoring Trust Fund for competitive Education Department grants to State educational agencies, which then fund individual tutoring programs in Title I elementary and secondary schools. One-third goes to a Career and Technical Education Support Trust Fund, which feeds future Perkins Act allotment calculations beginning in fiscal year 2027.

Who Benefits and How

Title I schools benefit because the tutoring trust fund supplies money for competitive grants supporting individual tutoring programs. State educational agencies benefit from a new grant stream they can award to eligible schools. Career and technical education programs benefit because Perkins allotment calculations include the new CTE trust fund revenue beginning in FY2027. Local journalism entities benefit if Congress later creates hiring credits financed from the local journalism trust fund. Small businesses that advertise in local news outlets benefit if future tax credits are enacted. Students at low-income schools benefit from tutoring support funded by large digital advertising platforms.

Who Bears the Burden and How

Large digital advertising platforms such as search, social-media, and sponsored-shopping hosts must pay a 50 percent tax on U.S. digital advertising receipts above 2.5 billion dollars. Treasury and IRS staff must define covered receipts, administer the tax, police deliberate VPN-evasion promotion, and move receipts among three trust funds. VPN service providers face enforcement risk if they deliberately promote tax evasion. Congress must still enact local journalism or local-advertising credits before the journalism fund can pay those credits. State educational agencies and eligible schools must apply for and administer tutoring grants under Education Department rules.

Key Provisions

• Establishes a 50 percent federal tax on covered digital advertising service receipts above 2.5 billion dollars.
• Requires Treasury guidance and penalty rules for deliberate VPN-evasion promotion.
• Creates a Local Journalism Preservation Trust Fund funded by one-third of digital-ad tax receipts for future journalism hiring and local-advertising credits.
• Creates a One-on-One Tutoring Trust Fund funded by one-third of receipts for State educational agency grants to Title I schools.
• Creates a Career and Technical Education Support Trust Fund funded by one-third of receipts for Perkins Act career-and-technical-education support.
• Requires Education Department competitive grants for individual tutoring programs in eligible Title I elementary and secondary schools.