45G Tax Credit

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 freight miles in the U.S. 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 $5B since its inception. The credit has been extended by overwhelmingly bi-partisan votes on six occasions, most recently as part of the FY20 Budget Process, where it was part of HR 1865.

The tax credit was made permanent in December of 2020 as part of the Consolidated Appropriations Act.


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