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Transportation Infrastructure &
Capacity Investment


RSI is dedicated to advancing rail as part of a balanced approach to transportation policy. Investing in rail will ensure competitiveness, promote job creation and improve our nation's mobility. Federal tax incentives for investments in new track, bridges, tunnels, as well as for investments in federal mandated positive train control systems can help achieve this goal. To help bridge the funding gap between private investment, Congress should enact legislation which provides tax incentives for projects that expand freight rail capacity. The U.S. Department of Commerce estimates that every $1 billion invested in rail directly creates 20,000 jobs.

Possible Tax Incentives in the 112th Congress

On December 16, 2010, Congress passed a sweeping tax and stimulus package that extended tax cuts for two years for all Americans and attempt to jolt the economy into revival. In addition to extending personal tax cuts, businesses will receive more favorable tax treatment for capital investments. Under the bill, businesses can deduct 100 percent of the cost of property placed in service between September 9, 2010 and December 31, 2011, as well as take advantage of 50 percent bonus depreciation in 2012.

The agreement also extends the short line railroad track maintenance tax credit through 2011. The credit creates an incentive for short line railroads to invest in track rehabilitation by providing a tax credit of 50 cents for every dollar the railroad spends on track improvements.

Missed Tax Incentives in the 111th Congress

Green Railcar Enhancement Act of 2010
On June 9, 2010, Congressmen Earl Blumenauer (D-OR-3), Kevin Brady (R-TX-8), Bill Shuster (R-PA-9) and John Tanner (D-TN8) introduced House Bill 5478 (H.R. 5478) , the Green Railcar Enhancement Act of 2010. This bill would provide a 25 percent tax credit for replacing or rebuilding old, inefficient railcars. The tax credit will be limited to cars built in 2010 and 2011 and would require a minimum of 8% increase in capacity or fuel efficiency.

H.R. 5478: Green Railcar Enhancement Act of 2010
Executive Summary
Diesel Fuel and CO2 Savings
ARCI Statement on Green Railcar Enhancement Act of 2010

Freight Rail Infrastructure Capacity Expansion Act of 2008 (H.R. 1806)

The Freight Rail Infrastructure Capacity Expansion Act of 2008 or H.R. 1806 would provide a 25 percent tax credit for investments in new rail track, intermodal facilities, rail yards, locomotives or other rail infrastructure expansion projects. All businesses, including railroads, ports, shippers, trucking companies would be eligible for the credit. Examples of qualifying capacity-expanding investments include adding new track to existing right of ways; adding or extending new sidings or spurs to existing right of ways; constructing new intermodal or transload facilities; and new technology-based expansion, including signaling in dark territory. New locomotives would qualify only if they increased the total horsepower of a carrier's locomotive fleet. Finally, all freight rail infrastructure capital expenditures would be eligible for expensing treatment.

H.R. 1806 was referred to the House Committee on Ways and Means. A companion bill, S. 3749 was introduced in the Senate by Senator Kent Conrad (D-ND).