45G Tax Credits

45G Tax Credits 2017 Update

The 45 G tax credit has been a mainstay tax credit for shortline railroads for over a decade. In some of the past years the credit only became available at very close to year end as part of a tax extension bill approved by Congress in December. This year looks to be no different. As everyone knows, there is movement in Congress currently to enact some type of major tax change/reform. Whatever comes of that legislation it will certainly deal with corporate tax credits such as the 45 G credit. It could be made permanent or completely eliminated. In any event, the likelihood of anything being passed by Congress before yearend is almost zero. There are not many working days left for Congress this year.

There is a high likelihood that the credit will again be extended for the 2017 tax year; an extension that will come very close to year end again. With that in mind, shortlines should be ready to move quickly to take advantage of the credit again. Let us know if you will have miles to assign [and the number of miles] or if you will need to acquire miles [and the number of miles] and we will work to get your transaction firmed up in order to take advantage of a last minute action by Congress. Remember, EKN charges only $50/mile to handle these transactions.

Railroad Track Maintenance Credit

The Railroad Track Maintenance Credit, also known as the shortline tax credit or 45G credit, was enacted by Congress in 2004 and went into effect in 2005 (26 USC § 45G).  It acts as an incentive for shortline and regional railroads and the companies that use them, to maintain and improve their rail infrastructure.   It provides a tax credit for track maintenance and other qualifying infrastructure expenses for class II and III railroads and their shippers, and companies that provide materials or service to those railroads.

The tax credit provides up to $3,500 per mile for qualifying maintenance.  In addition to railroads and their shippers and suppliers being able to claim this tax credit, railroads may also be able to transfer their credits if they are not able to use all of them, or obtain credits from another railroad if they have a need for additional miles. 

How could this credit benefit me?

To find out how the 45G credit might help your railroad, try our calculator.  By entering the number of miles of track you have and how much you spend on maintenance each year, you can see what you could get back on this credit, and whether you might benefit from trading some of your unused credits or obtaining additional credits.  Please be aware, this calculator assumes your railroad meets income and tax requirements to qualify for the credit. 

How do I learn more about this program?

If you think your railroad or business could benefit from this program, or you want to find out if you qualify, you can review the Qualified Track Maintenance Credit Form from the Internal Revenue Service or view the official IRS regulations

How can EKN Rail help me with the 45G credit?

EKN Rail Company has many years of experience in the railroad industry, specifically working with shortline railroads.  Using our extensive network of railroad and industry contacts, as well as government contacts, we can help you take advantage of this important program to make the investment you need for your track and your company.  We help our customers connect to utilize this fully-transferable tax credit by matching railroads and rail users who have made a qualifying investment but lack a tax liability with those who have a tax liability and may be able to use the credit.  We also advise our customers and assist them in completing the necessary assignment paperwork when transferring credits. 

EKN has an attorney on staff, as well as a former United States Senate aide with many years of experience working with federal agencies under two administrations.  We have the contacts and experience to successfully help companies take advantage of the 45G tax credit.  Most importantly, we are transparent in our work and only charge a reasonable fee to our customers based on successfully completed transactions. 

Whether your railroad or company already takes advantage of this credit or you are interested in using it for the first time, please contact us for more information.  We do not offer tax advice, but we can help you utilize the program if your tax advisor thinks you meet the requirements of the 45G tax credit.