The Short Line Tax Credit (45G) - It's Good Public Policy

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. 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 $4B since its inception.  The credit has been extended by overwhelmingly bi-partisan votes on five occasions and expired in 2017.  In the 115th Congress, the Brace Act (HR721 and S407), which called for permanence of the tax credit was co-sponsored by a bi-partisan majority in both houses, and was the most co-sponsored tax bill in the Senate.

On 12/20/18, the House of Representatives passed a measure that would make the tax credit permanent.