The Short Line Tax Credit (45G) - It's Good Public Policy

Short lines were in business as early as the mid-1800s, but the genesis of the industry we know today was the Staggers Act of 1980, which enabled entrepreneurs to save light-density branch lines from abandonment by Class I (largest) railroads.

Short lines today operate 47,500 route miles, or 29% of the total. The short line railroad industry touches one in five cars moving annually at origin or destination, providing first and last mile service to over 10,000 customers – particularly in rural America.

Short lines inherited track with decades of deferred maintenance, and therefore have had to devote significant portions of revenue (average of 25% annually) to rehabilitating this infrastructure to accommodate today’s 286-pound rail needs.

The Short Line Tax credit was first enacted by Congress in 2005.  The credit, also known by its tax line item reference, 45G, has allowed short lines to privately invest over $4B since its inception.  The credit has been extended by overwhelmingly bi-partisan votes on five occasions and expired in 2017.  In the 115th Congress, the Brace Act (HR721 and S407), which called for permanence of the tax credit was co-sponsored by a bi-partisan majority in both houses, and was the most co-sponsored tax bill in the Senate.

On December 20, 2018, the House of Representatives passed a measure that would make the tax credit permanent.

In the 116th Congress, H.R. 510 and S. 203 have been introduced, and call for permanence of the Credit.  These bills are now adding co-sponsors and we look forward to seeing floor action soon.

On June 18, 2019, H.R. 3301, “The Taxpayer Certainty and Disaster Tax Relief Act of 2019”, was introduced in the House Ways And Means Committee, and debate on the bill in the full committee occurred on June 20, 2019.  This legislation provides for the extension of the 45G tax credit through December 31, 2020, and retroactively enacts the credit from January 1, 2018 forward in section 112.
Short Line Tax Credit Brief   Short Line Success Stories

 

Sponsors of Section 45G Permanency Legislation in the 116th Congress


Sponsors of S. 203


Sponsors of H.R. 510 by State