Railroad Track Maintenance Tax Credit
Encyclopedia
The Railroad Track Maintenance Tax Credit, also known as the 45G Tax Credit, is a federal income tax credit for track maintenance conducted by shortlines and regional railroads
in the United States
. The credit granted an amount equal to 50% of qualified track maintenance expenditures and other qualifying railroad infrastructure projects. It was inserted into the tax code by the American Jobs Creation Act of 2004
, and was to take effect January 1, 2005 with an expiration date of December 31, 2009.
Following the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
, signed into law on December 17, 2010, the tax credit was retroactively extended for 2010 and the expiration date moved to January 1, 2012.
1980. By 2005 there were more than 500 railroads of this nature, serving small and mid-sized towns that otherwise would have lost rail service. These railroads were responsible for supporting more than 11,000 industrial sites, making them critically important to the local economies of the regions they serve. Maintenance costs for rail infrastructure is often expensive and difficult for low income railroads to cover, as a result some railroads partnered with the companies they served in order to fund maintenance. In order to assist the railroads with maintaining their infrastructure, the Railroad Track Maintenance Tax Credit was created. With more than $330 million in shortline infrastructure investment made annually, credits of $165 million would be placed back in the hands of the railroads and shippers through the tax credit.
and Class III
railroads, any shippers who transport property using a Class II or Class III railroad, and companies that perform maintenance on or provide material to qualified railroads. With the passing of the act in October 2004, the effective date for the credit was December 31, 2004, with a scheduled expiration date of January 1, 2008, a period of 3 years.
, the tax credit was extended through December 31, 2009. Expiration occurred for the second time as scheduled, however, an extension of the Railroad Maintenance Tax Credit was included in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
. Under the new legislation, the credit was retroactively applied to the 2010 tax year and extended through January 1, 2012.
Regional railroad
In the United States, a regional railroad is a railroad company that is not Class I, but still has a substantial amount of traffic or trackage . The Association of American Railroads has defined the lower bound as of track or $40 million in annual operating revenue...
in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. The credit granted an amount equal to 50% of qualified track maintenance expenditures and other qualifying railroad infrastructure projects. It was inserted into the tax code by the American Jobs Creation Act of 2004
American Jobs Creation Act of 2004
The American Jobs Creation Act of 2004 was a federal tax act composed of numerous tax credits for agricultural and business institutions. Included was the repeal of some excise taxes on fuel and alcohol, and the creation of tax credits for biofuels...
, and was to take effect January 1, 2005 with an expiration date of December 31, 2009.
Following the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 , was passed by the United States Congress on December 16, 2010 and signed into law by President Barack Obama on December 17, 2010....
, signed into law on December 17, 2010, the tax credit was retroactively extended for 2010 and the expiration date moved to January 1, 2012.
Background
In the United States, shortline and regional railroads grew exponentially following railroad deregulationStaggers Rail Act
The Staggers Rail Act of 1980 is a United States federal law that deregulated the American railroad industry to a significant extent, and replaced the regulatory structure that existed since the 1887 Interstate Commerce Act.-Background:...
1980. By 2005 there were more than 500 railroads of this nature, serving small and mid-sized towns that otherwise would have lost rail service. These railroads were responsible for supporting more than 11,000 industrial sites, making them critically important to the local economies of the regions they serve. Maintenance costs for rail infrastructure is often expensive and difficult for low income railroads to cover, as a result some railroads partnered with the companies they served in order to fund maintenance. In order to assist the railroads with maintaining their infrastructure, the Railroad Track Maintenance Tax Credit was created. With more than $330 million in shortline infrastructure investment made annually, credits of $165 million would be placed back in the hands of the railroads and shippers through the tax credit.
American Jobs Creation Act of 2004
The tax credit originated with the American Jobs Creation Act of 2004. The credit was capped at $3,500 per mile of track, with eligibility for Class IIClass II railroad
A Class II railroad in the United States is a mid-sized freight-hauling railroad, in terms of its operating revenue. , a railroad with revenues greater than $20.5 million but less than $277.7 million for at least three consecutive years is considered a Class II railroad...
and Class III
Class III railroad
A Class III railroad, as defined by the Surface Transportation Board, is a railroad with an annual operating revenue of less than $20 million . The term only applies to United States railroads, but is sometimes applied to other countries...
railroads, any shippers who transport property using a Class II or Class III railroad, and companies that perform maintenance on or provide material to qualified railroads. With the passing of the act in October 2004, the effective date for the credit was December 31, 2004, with a scheduled expiration date of January 1, 2008, a period of 3 years.
Extension
As scheduled, the tax credits expired on January 1, 2008. However, under the Emergency Economic Stabilization Act of 2008Emergency Economic Stabilization Act of 2008
The Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 (Division A of , commonly referred to as a bailout of the U.S. financial system, is a law enacted in response to the subprime mortgage crisis...
, the tax credit was extended through December 31, 2009. Expiration occurred for the second time as scheduled, however, an extension of the Railroad Maintenance Tax Credit was included in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 , was passed by the United States Congress on December 16, 2010 and signed into law by President Barack Obama on December 17, 2010....
. Under the new legislation, the credit was retroactively applied to the 2010 tax year and extended through January 1, 2012.