To amend the Internal Revenue Code of 1986 to modify the railroad track maintenance credit.
Key claim: HR516 would raise the annual short-line railroad track maintenance tax credit limit from $3,500 to $6,100 per mile (inflation-adjusted after 2025) and expand eligibility to tracks owned or leased as of January 1, 2024.
Abstract
(HR516 · 119th Congress) This bill increases the annual limit on the tax credit for qualified railroad track maintenance expenses (also referred to as the short line railroad tax credit) and expands eligibility for claiming the credit. Under current law, the tax credit is limited each tax year to $3,500 multiplied by the sum of the number of miles of railroad track owned or leased by the taxpayer (miles owned or leased) and the number of railroad track miles assigned to the taxpayer by a Class II or III railroad (miles assigned). This bill increases the annual limit to $6,100 multiplied by the sum of miles owned or leased and miles assigned. The $6,100 amount used in the calculation of the tax credit limit is adjusted for inflation for tax years beginning after 2025. The bill also expands eligibility for the tax credit to include gross expenses for maintaining railroad tracks owned or leased as of January 1, 2024. Under current law, the tax credit is limited to gross expenses for maintaining railroad tracks owned or leased as of January 1, 2015. Latest action (2025-01-16): Referred to the House Committee on Ways and Means.
Why this matters
The Section 45G short-line railroad track maintenance credit is a long-standing targeted tax expenditure; HR516 would nearly double the per-mile cap and refresh the eligibility date, shifting more of the maintenance cost of low-density freight rail onto federal taxpayers while easing it for Class II/III carriers and their shippers. The proposal is a straightforward parameter update rather than a structural reform, making it a useful data point on how legacy industry credits are periodically expanded and indexed.