ASLRRA calls on Congress to update 45G short-line tax credit

The American Short Line and Regional Railroad Association (ASLRRA) is lauding bipartisan legislation just introduced in the U.S. House and Senate that would modify the Railroad Track Maintenance Credit by updating it for inflation and allowing expenditures on short-line track that were acquired since 2015 to be included.

Commonly known as the Section 45G tax credit, the Railroad Track Maintenance Credit has been a powerful incentive for short lines to invest more of their own funds to upgrade track and bridges to meet modern standards, ASLRRA officials said in a press release.

The upgrades benefit not only the railroads, but the entire interconnected freight-rail network, thousands of shippers and the American public, they said. Short lines operate a third of the nation's rail system.

"This game changing policy has been responsible for more than $8 billion in investment to date, but outdated caps and limitations are threatening to erode its potency," said ASLRRA President Chuck Baker. "[Yesterday], four leaders in Congress 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.”

U.S. Sens. Ron Wyden (D-Ore.) and Mike Crapo (R-Idaho), and Reps. Mike Kelly (R-Pa.) and Earl Blumenauer (D-Ore.) introduced the Short Line Railroad Tax Credit Modernization Act (S. 5008/H.R. 9522) to modify the tax credit requirements.

The tax credit was made permanent in 2020. However, expenditures on rail that became short-line track after 2015 are ineligible for the tax credit and, over time, the cost to rehabilitate a mile of track has increased significantly. The legislation seeks to increase the cap per mile to $6,100, index the cost to inflation going forward, and allow expenditures on all short line-owned track to be eligible for the tax credit, ASLRRA officials said.

“Short-line rail is absolutely critical for rural and small communities. Modernizing the railroad track maintenance credit will help to invest in this critical infrastructure that extends opportunity to the furthest reaches of our communities," said Blumenauer in a statement.