U.S. Sens. Jim Banks (R-IN) and Chris Coons (D-DE) introduced legislation that would implement a tax credit to modernize the American railcar fleet.
The legislation, the Freight Rail Assets Investment to Launch Commercial Activity Revitalization Act (Freight RAILCAR Act), would provide a three-year, 10 percent investment tax credit for private companies. The lawmakers said the tax credit would incentivize companies to retire old and less efficient assets while positioning American industry to address supply chain constraints and supporting U.S. manufacturing jobs.
Officials said the legislation would defray up to 10 percent of a company’s investment in new railcars through the proposed credit, limiting the credit to 1,000 new freight cars per company per year. Additionally, the legislation would require existing railcars to have been in service during the prior four years and to be taken out of service permanently, and to prohibit Chinese railcar manufacturer CRRC or other state-owned or state-subsidized entities from qualifying for the tax credit.
The legislation is supported by the Rail Security Alliance, American Iron and Steel Institute, Railway Supply Institute, and American Foundry Society have endorsed this bill.
Currently, the North American railcar fleet is aging and in need of updating, officials said. More than 1.6 million railcars, with over 200,000 being more than 40 years old, are part of the fleet. Estimates put the number of freight railcars in danger of becoming obsolete and requiring replacement within the next 15 years.