Senate passes bill that would extend short-line tax credit through 2014

The short-line tax credit is just one step away from a one-year extension. The Senate on Tuesday passed the Tax Increase Prevention Act of 2014 (H.R. 5771), which will extend the Section 45G tax credit through the 2014 tax year if President Barack Obama signs the measure, according to the American Short Line and Regional Railroad Association (ASLRRA).

Action on the bill — which included House passage on Dec. 3 — was critical for hundreds of small railroads as well as railroad customers, contractors and suppliers, ASLRRA officials said in a press release. The Joint Committee on Taxation estimates that the Section 45G tax credit incentivizes between $300 million and $400 million in short-line capital and maintenance expenditures each year, they said.

The bill would extend the Railroad Track Maintenance Credit to cover expenditures short lines paid or incurred in tax year 2014. Originally enacted in January 2005, the Section 45G provision enables regionals and short lines to claim a tax credit of 50 cents for every dollar spent on infrastructure improvements, up to a cap of $3,500 per mile of owned or leased track.

The legislative action marks the culmination of two years of hard work to extend the tax credit, which expired on Dec. 31, 2013, ASLRRA officials said.

"I am pleased that Congress has acted today to end uncertainty about the short line tax credit. When 45G is in effect, it greatly increases investment that improves important railroad infrastructure," said ASLRRA President Linda Bauer Darr.

Since the tax credit will again expire on Jan. 1, 2015, ASLRRA lobbyists plan to "be back at the grindstone" early next year working to ensure that small railroads can use more of their revenue to enhance the quality and safety of their infrastructure, association officials said.