1/3/2013

Federal Legislation & Regulation Article
Short-line tax credit extended through 2013

The "fiscal cliff" legislation approved by Congress and signed by President Barack Obama on Jan. 2 included a provision the short line industry has sought for more than a year: an extension of the Section 45G tax credit.

The short-line tax credit — which had expired at 2011's end and remained in limbo throughout 2012 — now is retroactive to Jan. 1, 2012, and expires at 2013's end per a two-year extension.

Originally enacted in January 2005, the Section 45G provision enables regionals and short lines to claim a tax credit of 50 cents for every dollar spent on infrastructure improvements, up to a cap of $3,500 per mile of owned or leased track.

The tax credit helps fund more than $300 million worth of short-line infrastructure improvements annually, according to American Short Line and Regional Railroad Association (ASLRRA) estimates. In addition, between 500,000 and 1.5 million additional crossties are installed each year by small railroads because of the tax credit, per Railway Tie Association estimates.

"Since 2005, the 45G credit has helped small, community railroads and their customers reinvest over $1.2 billion dollars in preserving freight railroad infrastructure to serve customers and communities across America," said ASLRRA President Richard Timmons in a prepared statement. "Short line railroading is one of the most capital-intensive industries in America. While competing highway infrastructure is maintained by federal and state governments, short-line infrastructure is preserved by small companies."