A bipartisan bill proposed Jan. 16 on Capitol Hill would increase the railroad track maintenance credit in an effort to make it easier for local rail lines to keep operating and remain in good repair.
“Short line rail service connects communities and provides rail service in small towns nationwide. In some cases, short lines provide the only source for local companies to ship their products nationally,” said U.S. Rep. Mike Kelly (R-PA), who sponsored the bill. “This legislation allows rail companies to continue to provide safe and efficient service and provides a return on taxpayer investment.”
Specifically, the Short Line Railroad Tax Credit Modernization Act, H.R. 516, which is cosponsored by U.S. Rep. Mike Thompson (D-CA), would amend the Internal Revenue Code of 1986 to increase the tax credit — also known as the 45G tax credit — from $3,500 to $6,100.
“Short line rail is critical for rural and small communities to connect to suppliers and distributors,” Thompson said. “Expanding our tax credits to help ensure these rail lines are modernized and maintained just makes sense.”
Chuck Baker, president of the American Short Line and Regional Railroad Association, endorsed H.R. 516, pointing out that the 45G tax credit has been an incredibly successful public-private partnership, responsible for more than $8 billion in infrastructure investment by the short line freight railroad industry since its inception.
However, he also said that outdated caps and limitations are threatening the potency of the tax credit.
“The passage of this bill will enable short line railroads to provide efficient and safe access to U.S. and world markets for thousands of industrial, agricultural, and energy shippers,” said Baker, “and grow the economies of the small towns and rural communities in which they operate.”
The bill is under consideration in the U.S. House Ways and Means Committee.