Idaho legislator proposes short-line tax credit

Idaho Rep. Clark Kauffman recently introduced a bill that would provide the state's regionals and short lines a tax credit for infrastructure improvements.

House Bill 61 proposes a 40 percent income tax credit for the costs small railroads incur to reconstruct, replace, maintain or expand their infrastructure, including rail lines, bridges and sidings. The tax credit would be capped at $3,500 per mile of rail line owned or leased by the railroad.

There are about a dozen regionals and short lines that operate in Idaho and control 885 miles of track.

If the tax credit is obtained but isn't used, it can be transferred once to a customer or vendor of the railroad, but any funds received from that transfer must be reinvested in the rail infrastructure, according to Kauffman.

However, the bill would limit a regional or short line to applying either the federal Section 45G tax credit or the Idaho tax credit toward their infrastructure improvements — they can’t claim both, Kauffman said in an email. The federal tax credit expired at 2017's end, but the newly reintroduced Building Rail Access for Customers and the Economy — or BRACE — Act (H.R. 510/S. 203) proposes to make the Section 45G credit permanent.

The tax credit proposed by House Bill 61 would take effect Jan. 1, 2020, but would not apply to any expenditures incurred on or after Jan. 1, 2025. The five-year sunset clause would ensure the Legislature can review the tax credit in the future to see if it's achieving the desired results, Kauffman said.

The bill will be considered by the Idaho House Revenue and Taxation Committee, then move to the state House floor if approved.