The Improving Rural Transportation Act directs the Secretary of Transportation to establish a grant program for demonstration projects that test advanced transportation technologies in small and mid-sized communities with populations under 200,000. Eligible recipients include state transportation departments, local governments, public transit agencies, and other entities that can partner with universities, nonprofits, and private companies. The demonstration projects may focus on connecting transportation modes like buses, trains, and ride-sharing services, as well as testing electric vehicles, automated systems, and micromobility devices like e-scooters. The federal government can cover up to 80 percent of project costs, with the remaining funding coming from state and local sources. The bill gives priority to projects that demonstrate practical scalability, reliability, and cost-effectiveness.