The moratorium was first enacted in 1998. State and local governments that already had Internet taxes were allowed to keep them under the current moratorium, but under the new agreement, jurisdictions with Internet taxes would be required to phase them out by mid-2020.
Jurisdictions in seven states - Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas and Wisconsin - tax access to the Internet, according to the nonpartisan Congressional Budget Office. Together they would lose "several hundred million dollars annually" if they were no longer allowed to collect the taxes.
Sen. Ron Wyden, D-Ore., said the measure means that small businesses and individuals will "finally be free from the threat of hundreds of dollars in new taxes each year, just to access the Internet."
The Internet tax moratorium was attached to a separate measure modernizing the US customs system.
That measure attracted controversy earlier this year when the Senate voted to give the government more power to retaliate against countries, like China, that manipulate the value of their currency to make their exports more attractive. The Obama administration opposed the currency provision even though it was authored by a key ally, New York Democrat Charles Schumer.
More broadly, the customs measure is aimed at beefing up enforcement against trade cheats and facilitating the free flow of legitimate trade.
"This bill will make it easier for Americans to compete and win in marketplaces around the world," said Ways and Means Committee Chairman Kevin Brady, R-Texas. "Strong enforcement provisions will also level the playing field and help ensure that other countries follow the same rules."