Effort to make shortline tax credit permanent enters both houses of Congress

Written by Mischa Wanek-Libman, editor
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Help from the 45G shortline tax credit allowed the Kansas & Oklahoma Railroad to upgrade 43 miles of rail.
Kansas and Oklahoma Railroad

Less than a week before the rail industry gathers in Washington, D.C., to promote issues, such as the 45G shortline tax credit, legislation was introduced in both houses of Congress that would make the tax credit permanent.

 

The Building Rail Access for Customers and the Economy Act (BRACE Act) was introduced to the House of Representatives by Rep. Lynn Jenkins (R-KS-02) and to the Senate by Sen. Mike Crapo (R-ID) and Sen. Ron Wyden (D-OR).

The shortline railroad track maintenance credit provides shortline and regional railroads a 50-cent tax credit for track maintenance expenses, up to $3,500 per mile of track owned or leased by the railroad. The tax credit has been extended, often times retroactively, in two-year increments since 2005. Last December, Congress passed the Short line Short Line Railroad Rehabilitation and Investment Act of 2015, which expanded to the credit to those smaller railroads that were established after 2005 and extended the credit through 2016.

The American Short Line and Regional Railroad Association (ASLRRA) applauded the legislations introduction.

“Since originally enacted in 2004, the 45G tax credit has proven to be an effective tool in maximizing capital investment in critical infrastructure across a wide swath of urban, rural and small town America. By making 45G permanent, the BRACE Act will provide the certainty small businesses need to plan and complete important rehabilitation projects. This long-term investment strategy is the ‘brace’ that allows shortline railroads to provide the industries they serve a safer and more competitive mode of transportation” said Linda Darr, president, ASLRRA. “The BRACE Act is good for our small businesses, good for our customers, good for our industry suppliers, good for safety and good for Americans who consume the products that we move.”

According to ASLRRA, the tax credit has enabled shortline railroads to increase their infrastructure investment by 128 percent from its inception in 2004 through 2013, the final year prior to the 2015 extension. ASLRRA explains that over the life of the credit, shortline capital investment has ranged between 24 to 31 percent of annual revenues, significantly higher than most other industries in the country.

“The BRACE Act will allow railroads to plan for investment in track and other improvements far into the future; and those investments will pay off for everyone in the form of higher revenues generated by providing broader access to efficient transportation to our customers,” shared Ed McKechnie, chairman of ASLRRA. “Most importantly, the investment in track and other improvements will make our operations that much safer.”

 

The Senate version of the BRACE Act, S.2595, is available for viewing here.

The House of Representatives version of the BRACE Act, H.R.4626, is available for viewing here.

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