The Freight RAILCAR Act creates a new tax credit to encourage railroad companies to replace or modernize their freight railcar fleets. Under the bill, railroads can claim a tax credit equal to 10 percent of their qualifying modernization expenses, capped at 1,000 railcars per company per year. To qualify, new replacement railcars must be built after the bill's enactment and ordered within three years, and they must replace two older railcars that are scrapped and permanently removed from service; modernized railcars must show at least an 8 percent improvement in capacity or fuel efficiency, or meet specific safety performance standards. The credit expires three years after enactment, and companies ineligible for federal contracts due to state-owned enterprise involvement cannot claim it. Within three years of enactment, the Treasury Department must report to Congress on credit usage, including how many railcars were scrapped, newly built, and placed into service as a result of the incentive.
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