Action Expected Soon on Short Line Tax Credit

The short line infrastructure tax credit program will likely be extended by Congress before the end of the first quarter, according to a key champion of the original legislation.

Sen. Jerry Moran (R-Kan.) said he expects that the so-called 45G short line tax credit, which provides an incentive for short lines to invest private sector dollars on freight railroad track rehabilitation and other projects, will be extended by the end of March. The tax credit expired at the end of 2013.

Moran made his remarks at the annual conference of the National Railroad Construction and Maintenance Association, which was held this week in Palm Desert, Calif. “45G has become a cause for me,” Moran said, “and this legislation became law because people in this room visited lawmakers and had compelling stories to tell. You have convinced many of my colleagues.”

Section 45G creates an incentive for the private sector to invest in rail infrastructure by providing a tax credit of 50 cents for every dollar the railroad, or a qualified customer or supplier, spends on track improvements. The credit is capped based on a mileage formula. Over the past five years, the short line railroad tax credit has generated $1.5 billion in railroad infrastructure investment. The Railway Tie Association estimates that as many as 1.5 million additional railroad ties are installed when the credit is in effect.

Moran noted that the tax credit enjoys widespread support in Congress and that it is the most co-sponsored piece of legislation in the Senate today. In short, “the short line tax credit works and that’s why we’ve been able to extend it,” he said.

“We hope and we think that between now and March 30 it will be extended,” he said.