The Case for a Permanent Short Line Tax Credit

The short line tax credit (Section 45G of the Internal Revenue Code of 1986) is at the center of ASLRRA’s legislative advocacy agenda. This tax credit helps over 550 short line railroads preserve nearly 50,000 miles of track that otherwise would have been abandoned.  This track received little investment by its previous owners and must be upgraded and maintained if over 10,000 rail customers are to stay connected to the national main line rail network.   These freight rail connections are critical to preserving the first and last mile of connectivity to factories, grain elevators, power plants, refineries, mines, and facilities that employ over 1 million Americans.  

Section 45G connects thousands of rail customers and communities to the national freight network. While highway infrastructure is maintained by federal and state governments, freight rail infrastructure is maintained by private sector investments.  Short lines use approximately 184 million gallons of fuel to move 10 million carloads of freight annually.  Trucks would require 540 million gallons to move the same freight.  Short lines save shippers 20% to 50% over comparable truck transportation. Short lines keep 30 million truckloads per year off the highway, saving billions per year in highway damage costs. To ensure that short lines can to deliver these benefits, and make crucial infrastructure investments in a stable financial planning environment, ASLRRA is working with Congress to make Section 45G permanent.

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The Short Line Tax Credit has helped railroads invest in projects crucial to maintaining rail service in communities across America. Click the button below to learn more about projects made possible by 45G.

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Building Rail Access for Customers and the Economy Act (BRACE Act)

Representatives Lynn Jenkins (R-KS), Earl Blumenauer (D-OR), Rodney Davis (R-IL), and Dan Lipinski (D-IL) have introduced H.R. 721, and Senators Mike Crapo (R-ID) and Debbie Stabenow (D-MI) have introduced S. 407 to permanently extend the Short Line Tax Credit described in Section 45G. Originally enacted in 2004, Section 45G creates a strong incentive for short line railroads to invest private sector dollars on freight railroad track rehabilitation. The credit expired at the end of 2016.


What the BRACE Act Will Do

The Short Line Tax Credit leverages private sector investment in rail infrastructure by providing a tax credit of 50 cents for every dollar spent on track improvements. Short line railroads created before January 1, 2015 are eligible to receive this credit, which is capped based on a mileage-based formula. H.R. 721 and S. 407 proposes one simple action, to make 45G permanent. Section 45G expired on December 31, 2016. The BRACE Act will amend Section 45G by removing this sunset provision. 

Broad Bi-Partisan Support

From the 111th through the 114th Congress, legislation to extend 45G enjoyed broad bi-partisan support. In the 114th Congress, the BRACE Act was co-sponsored by over 226 Representatives and 54 Senators.  Supporters recognize that the credit creates jobs and preserves valuable transportation infrastructure in areas of the country that can ill-afford fewer freight alternatives.

Click here to view the full list of sponsors for HR 721.

Click here to view the full list of sponsors for S 407.

Show Your Support for the Short Lines

House Supporters – To Co-Sponsor H.R. 721, contact:

Senate Supporters – To Co-Sponsor S. 407, contact:

Sponsors of Section 45G Permanency Legislation in the 115th Congress


Sponsors of S. 407


Sponsors of H.R. 721 by State


Sponsors of H.R. 721 by District

Below is a list of H.R. 721 and S. 407 supporting documentation:

References for Advocates of 45G

Short Line Success Stories

  • Click here to view a compilation of before and after photos featuring projects made possible by the 45 G tax credit.
  • Read the endorsements for the Short Line Tax Credit written by short line operators and customers alike.

​​For more information please contact ASLRRA Washington Representatives Adam Nordstrom and Lindsey Collins via email or by phone at 202-638-7790.