ASLRRA Calls for Congress to Modernize 45G Tax Credit

ASLRRA

WASHINGTON, D.C. - The American Short Line and Regional Railroad Association (ASLRRA) commended Senators Ron Wyden and Mike Carp and Representatives Mike Kelly and Earl Blumenauer for introducing S. 5008 and H.R. 9522.

Both S. 5008 and H.R. 9522 call to modify the Railroad Track Maintenance Credit. Introduced to Congress on September 10, 2024 by Senate Finance Committee Chair Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-Idaho), this updates the credit “for inflation and [allows] expenditures on short line track that has been acquired since 2015 to be included,” according to a release from ASLRRA. The House version, H.R. 9522, was introduced by Representative Mike Kelly (R-RA,16) and Representative Earl Blumenauer (D-OR,3).

This credit, also known as the 45G tax credit, acts as an incentive for short lines to use their own funds to upgrade track and bridges, “a benefit for the entire interconnected freight rail network, thousands of rail shippers in critical industries, and the American public.” More than 600 short lines across the country are able to upgrade track and make modernization improvements due to this tax credit.

In 2020, the tax credit was made permanent after “overwhelming bipartisan support in the 116th Congress.” As of reporting, it allows for a “$.40 tax credit for each dollar invested in upgrading rail and bridges, up to a cap of $3,500 per mile of rail.” Despite this, any rail expenditures that became short line track after 2015 are not eligible for the tax credit. The legislation seeks to increase the cap per mile to $6,100, “index the cost to inflation going forward, and allow expenditures on all short line-owned track to be eligible for the tax credit.”

ASLRRA President Chuck Baker said, “This game changing policy has been responsible for more than $8B in investment to date, but outdated caps and limitations are threatening to erode its potency. Today, four leaders in Congress have acted, enabling updates to the credit that will serve the rail industry, shippers, and the economies of small towns across the country for years to come. . . We are immensely grateful for the bipartisan and bicameral leadership of Senators Wyden and Crapo and Representatives Kelly and Blumenauer.”

Senator Wyden said, “Short line and regional railroads are an essential part of our infrastructure and a lifeline that connects small businesses with consumers in markets all over the country. Senator Crapo and I worked for years to make the tax credit for these railroads permanent, and the next step is to improve it to meet the needs of our businesses and communities today. Our bipartisan legislation will deliver much-needed relief for short line and regional railroads to make vital upgrades that connect our rural communities, small towns, and urban centers to the marketplace.”

Senator Crapo said, “Access to affordable and reliable options for transporting goods to markets is an important part of Idaho small businesses’ success and ability to grow and innovate. This legislation will modernize existing tax incentives that encourage and support investment in short line railroads, helping to improve short line railroads’ efficiency at moving Idaho goods to customers worldwide.”