Legislators propose upgraded tax credit for short line rail maintenance
A federal tax credit that’s helped attract billions in private investment in short line railroads could be getting an upgrade.
Legislation introduced in the Senate seeks to modernize the Short Line Railroad Maintenance Tax Credit, known as 45G, that has been responsible for driving more than $8 billion in private spending for short line rail infrastructure since it was introduced in 2005.
The bill, co-sponsored by Republican Mike Crapo of Idaho, chairman of the Senate Finance Committee, and Ron Wyden, a Democrat from Oregon and ranking member of the committee, follows similar House legislation introduced in January.
The credit covers 40 cents of every dollar of qualified railroad track maintenance expenditures such as roadbed, ties, rail, and bridge work capped at $3,500 per mile, excluding track converted to short line mileage after 2015.
The new legislation would raise the credit to $6,100 per mile, include all short line track, and index the measure to inflation going forward.
The short line group said today’s costs for rail maintenance exceed $15,000 per mile.
“This 45G tax credit is widely considered an effective and successful public policy,” said said Chuck Baker, president of the American Short Line and Regional Railroad Association. “It has been responsible for significant private investment in infrastructure, but outdated caps and limitations are threatening to erode its potency. Today, Senators Crapo and Wyden have acted, enabling updates to the credit that will serve the rail industry, shippers, and the economies of small towns across the country for years to come.
“We are immensely grateful for the bipartisan and bicameral leadership of Senators Crapo and Wyden and Representatives Kelly and Thompson [in the House] in supporting the continued growth and success of the short line industry and more importantly the thousands of agricultural, energy, manufacturing, and industrial shippers we serve.”
More than 600 short lines operate one-third of the nation’s rail system, according to ASLRRA, and are the origin or destination point of one in five cars moving throughout the system.
The Senate bill comes just days before members of the ASLRRA gather in Washington on May 7 for a one-day lobbying blitz of Congress.
“Short line railroads are critical infrastructure that connect Idaho’s farmers, ranchers and manufacturers to national and global markets, supporting local jobs and driving economic growth in rural Idaho,” said Crapo, in a joint release. “Modernizing the Short Line Railroad Tax Credit will provide railroads with necessary certainty and resources to invest in safety, efficiency and longterm infrastructure improvements in our regional areas.”
