Short-line tax credit modernization bill adds 100th co-sponsor

The American Short Line and Regional Railroad Association (ASLRRA) this week announced the 100th co-sponsor of the Railroad Tax Maintenance Credit Modernization (H.R. 516) bill.

The legislation would increase the annual limit on the tax credit for qualified railroad track maintenance expenses and expands eligibility for claiming the credit. The 102 cosponsor count for H.R. 516 places the bill in the top 2% of all tax bills active in the 119th Congress in the House of Representatives, ASLRRA officials said in a press release.

Known as the short-line tax credit, or 45G, the current law is limited each tax year to $3,500 multiplied by the sum of the number of miles of railroad track owned or leased by the taxpayer (miles owned or leased) and the number of railroad track miles assigned to the taxpayer by a short line or regional.

The bill calls for increasing the annual limit to $6,100 multiplied by the sum of miles owned or leased and miles assigned. The $6,100 amount used in the calculation of the tax credit limit is adjusted for inflation for tax years beginning after 2025.

U.S. Reps. Mike Kelly (R-Pa.) and Mike Thompson (D-Calif.) introduced the legislation in January. Both are members of the House Ways and Means Committee, and are chair and ranking member, respectively, of the Tax Subcommittee.

 The tax credit has allowed short lines to invest in upgrading rails and bridges to modern standards, investments that improve safety, fuel growth for shippers and support the economies of small towns and rural communities, said ASLRRA President Chuck Baker.

"However, the credit has not accounted for inflation, which over time has eroded the power of the credit and does not apply to short lines established since 2015," Baker said. "This (H.R. 516) bill, alongside its Senate counterpart (S. 1532), will update the credit to address these issues so that the credit can continue to serve the country’s freight-rail shippers as Congress intended."