The short-line railroad tax credit is gaining bipartisan momentum in Congress, with lawmakers pushing for modernization that increases annual limits, adjusts for inflation, and expands eligibility to more rail operators. This is reported by the railway transport news portal Railway Supply.

The short-line railroad tax credit is gaining bipartisan momentum in Congress, with lawmakers pushing for modernization that increases annual limits, adjusts for inflation, and expands eligibility to more rail operators.
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Expanding the Railroad Tax Credit for Growth

The Railroad Tax Maintenance Credit Modernization bill (H.R. 516) has reached 100 co-sponsors, marking a significant milestone for rail industry advocates. Representatives Mike Kelly (R-Pa.) and Mike Thompson (D-Calif.) introduced it in January.

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The proposal increases the annual limit from $3,500 to $6,100 per mile for both owned or leased track and track assigned by another railroad. Starting in 2026, the $6,100 figure would adjust for inflation, ensuring the credit keeps pace with economic changes.

Unlike the current law, the modernization would also extend eligibility to short lines established after 2015, allowing more operators to invest in rail upgrades. Supporters believe these measures will improve safety, efficiency, and economic growth.

Why the Credit Matters for Rail Infrastructure?

ASLRRA President Chuck Baker highlighted that the credit has already enabled short lines to bring infrastructure up to modern standards. Upgrades to rails and bridges have improved safety and supported rural economies.

With 102 House members now backing H.R. 516, the bill ranks among the top 2% of active tax-related legislation in the 119th Congress. Aligning the House bill with its Senate counterpart, S. 1532, is considered key to passage.

Industry experts argue that modernizing the credit will stimulate further private investment and strengthen America’s freight transportation network. They view it as a cost-effective way to enhance infrastructure without excessive taxpayer spending.

Source: www.progressiverailroading.com

FAQ

What is the railroad tax credit?

The railroad tax credit, also known as 45G, offers financial incentives for short-line and regional railroads to maintain and upgrade their tracks. Learn more here.

How will the credit change under H.R. 516?

It will raise the limit to $6,100 per mile, adjust for inflation starting in 2026, and expand eligibility to newer short-line railroads.

Why is expanding the credit important?

Expanding the credit will improve infrastructure, enhance safety, and boost rural economies by allowing more operators to fund essential maintenance projects.

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