The Short Line Tax Credit (45G) is one step closer to permanency.
The American Short Line and Regional Railroad Association (ASLRRA) reports that the $2.3 trillion omnibus appropriations/coronavirus relief/tax legislation introduced Dec. 20 in the House of Representatives includes 45G, which supports private investment in improving and building infrastructure up to a $3,500 cap per short line railroad mile.
In this new legislation, the credit would remain at the current $3,500 per mile limit indefinitely; no expiration date will be built into the law. The rate of the credit would be at the current 50% for 2020, 2021 and 2022, and then adjust to 40% in 2023.
Introduced into law in 2005, the credit has been “one of the most successful public-private partnerships on record, supporting hundreds of small railroads as they have invested more than $5 [billion] to date to improve safety and upgrade lines that had experienced decades of deferred maintenance and were frequently on the verge of abandonment before becoming short lines,” ASLRRA said.
However, it has been “subject to the vagaries of the tax extenders process and has thus frequently been authorized retroactively and for one or two years at a time.”
“Creating long-term tax certainty will enable small business railroads to meet customer needs throughout the country, particularly in the energy, agriculture and manufacturing industries, immediately and far into the future,” ASLRRA President Chuck Baker said.