A key federal tax incentive that has funneled over $8 billion in private investment into America’s short line railroad infrastructure could soon be expanded under a new bipartisan proposal. The legislation, introduced this week in the U.S. Senate, aims to modernize the Short Line Railroad Maintenance Tax Credit (45G), addressing what industry leaders say are outdated provisions that no longer match today’s infrastructure costs.
The bill is co-sponsored by Senate Finance Committee Chairman Mike Crapo (R-ID) and Ranking Member Ron Wyden (D-OR). It mirrors similar legislation introduced in the House in January, offering a rare case of bipartisan momentum in transportation infrastructure policy.
Key Provisions of the Proposal
At its core, the bill seeks to raise the tax credit from $3,500 to $6,100 per track mile, expand its coverage to include all short line mileage, and index the credit to inflation moving forward — a feature long requested by industry stakeholders.
The current version of 45G covers 40% of qualified maintenance spending for short line railroads — expenses that include roadbed upgrades, rail ties, track replacements, and bridge repair. However, it excludes track converted to short line use after 2015, a restriction that the new bill would remove.
According to the American Short Line and Regional Railroad Association (ASLRRA), the average cost of maintaining short line railroads has surged to more than $15,000 per mile, making the current cap increasingly inadequate.
“This 45G tax credit is widely considered an effective and successful public policy,” said Chuck Baker, president of ASLRRA. “But outdated caps and limitations are threatening to erode its potency. Senators Crapo and Wyden have acted decisively to update the credit, supporting critical infrastructure and the economies of small towns across the country.”
Short Lines: A Backbone of Rural Logistics
More than 600 short line railroads operate roughly one-third of the U.S. freight rail network, often connecting rural and agricultural communities to the national and global supply chains. These routes are frequently used for transporting grain, timber, energy products, and industrial goods — commodities that originate in areas not served by Class I railroads.
“Short line railroads are critical infrastructure that connect Idaho’s farmers, ranchers and manufacturers to national and global markets,” said Senator Crapo. “This credit supports local jobs and helps drive economic growth in rural America.”
Political Timing and Industry Mobilization
The introduction of the Senate bill comes just days ahead of a major lobbying push by ASLRRA, with members slated to descend on Capitol Hill for a one-day event on May 7 to advocate for federal rail policies, including the 45G expansion.
Industry leaders are hoping to secure legislative movement during a window of relative consensus on infrastructure spending — a policy area that has remained one of the few cross-party priorities in a divided Congress.
Looking Ahead
With support from both the House and Senate, and endorsements from agricultural, energy, and industrial sectors, the upgraded 45G tax credit could be poised for passage as part of a broader infrastructure or tax extenders package later this year.
