Title 26 — Internal Revenue CodeRelease 119-73
§45G Railroad track maintenance credit
Title 26 › Subtitle Subtitle A— - Income Taxes › Chapter CHAPTER 1— - NORMAL TAXES AND SURTAXES › Subchapter Subchapter A— - Determination of Tax Liability › Part PART IV— - CREDITS AGAINST TAX › Subpart Subpart D— - Business Related Credits › § 45G
Summary
Gives a tax credit for money spent on keeping railroad track in good repair. The credit equals 40% of eligible track maintenance costs in the year (50% for tax years starting before January 1, 2023). The credit cannot be more than $3,500 times the miles of track the taxpayer owns or leases plus any miles a Class II or Class III railroad assigns to them. Class II and Class III railroads and people who move goods on their tracks or provide rail-related goods or services can claim the credit, but only for assigned miles. Qualified costs are the total money spent to maintain track, roadbed, bridges, and related structures on tracks owned or leased by a Class II or III railroad as of January 1, 2015 (ignore payments from the assigning railroad). Class II and III are defined by the Surface Transportation Board. If you take the credit, reduce the track’s tax basis by that amount.
Full Legal Text
Title 26, §45G
Internal Revenue Code — Source: USLM XML via OLRC
(a)For purposes of section 38, the railroad track maintenance credit determined under this section for the taxable year is an amount equal to 40 percent (50 percent in the case of any taxable year beginning before January 1, 2023) of the qualified railroad track maintenance expenditures paid or incurred by an eligible taxpayer during the taxable year.
(b)(1)The credit allowed under subsection (a) for any taxable year shall not exceed the product of—
(A)$3,500, multiplied by
(B)the sum of—
(i)the number of miles of railroad track owned or leased by the eligible taxpayer as of the close of the taxable year, and
(ii)the number of miles of railroad track assigned for purposes of this subsection to the eligible taxpayer by a Class II or Class III railroad which owns or leases such railroad track as of the close of the taxable year.
(2)With respect to any assignment of a mile of railroad track under paragraph (1)(B)(ii)—
(A)such assignment may be made only once per taxable year of the Class II or Class III railroad and shall be treated as made as of the close of such taxable year,
(B)such mile may not be taken into account under this section by such railroad for such taxable year, and
(C)such assignment shall be taken into account for the taxable year of the assignee which includes the date that such assignment is treated as effective.
(c)For purposes of this section, the term “eligible taxpayer” means—
(1)any Class II or Class III railroad, and
(2)any person who transports property using the rail facilities of a Class II or Class III railroad or who furnishes railroad-related property or services to a Class II or Class III railroad, but only with respect to miles of railroad track assigned to such person by such Class II or Class III railroad for purposes of subsection (b).
(d)For purposes of this section, the term “qualified railroad track maintenance expenditures” means gross expenditures (whether or not otherwise chargeable to capital account) for maintaining railroad track (including roadbed, bridges, and related track structures) owned or leased as of January 1, 2015, by a Class II or Class III railroad (determined without regard to any consideration for such expenditures given by the Class II or Class III railroad which made the assignment of such track).
(e)(1)For purposes of this section, the terms “Class II railroad” and “Class III railroad” have the respective meanings given such terms by the Surface Transportation Board.
(2)Rules similar to the rules of paragraph (1) of section 41(f) shall apply for purposes of this section.
(3)For purposes of this subtitle, if a credit is allowed under this section with respect to any railroad track, the basis of such track shall be reduced by the amount of the credit so allowed.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
2020—Subsec. (a). Pub. L. 116–260, § 105(b), substituted “40 percent (50 percent in the case of any taxable year beginning before
January 1, 2023)” for “50 percent”. Subsec. (f). Pub. L. 116–260, § 105(a), struck out subsec. (f). Text read as follows: “This section shall apply to qualified railroad track maintenance expenditures paid or incurred during taxable years beginning after
December 31, 2004, and before
January 1, 2023.” 2019—Subsec. (f). Pub. L. 116–94 substituted “
January 1, 2023” for “
January 1, 2018”. 2018—Subsec. (f). Pub. L. 115–123 substituted “
January 1, 2018” for “
January 1, 2017”. 2015—Subsec. (d). Pub. L. 114–113, § 162(b), substituted “
January 1, 2015” for “
January 1, 2005”. Subsec. (f). Pub. L. 114–113, § 162(a), substituted “
January 1, 2017” for “
January 1, 2015”. 2014—Subsec. (f). Pub. L. 113–295 substituted “
January 1, 2015” for “
January 1, 2014”. 2013—Subsec. (f). Pub. L. 112–240 substituted “
January 1, 2014” for “
January 1, 2012”. 2010—Subsec. (f). Pub. L. 111–312 substituted “
January 1, 2012” for “
January 1, 2010”. 2008—Subsec. (f). Pub. L. 110–343 substituted “
January 1, 2010” for “
January 1, 2008”. 2006—Subsec. (d). Pub. L. 109–432 inserted “gross” after “means” and “(determined without regard to any consideration for such expenditures given by the Class II or Class III railroad which made the assignment of such track)” before period at end. 2005—Subsec. (b). Pub. L. 109–135, § 403(f)(1), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “The credit allowed under subsection (a) for any taxable year shall not exceed the product of— “(1) $3,500, and “(2) the number of miles of railroad track owned or leased by the eligible taxpayer as of the close of the taxable year. A mile of railroad track may be taken into account by a person other than the owner only if such mile is assigned to such person by the owner for purposes of this subsection. Any mile which is so assigned may not be taken into account by the owner for purposes of this subsection.” Subsec. (c)(2). Pub. L. 109–135, § 403(f)(2), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “any person who transports property using the rail facilities of a person described in paragraph (1) or who furnishes railroad-related property or services to such a person.”
Statutory Notes and Related Subsidiaries
Effective Date
of 2020 Amendment Pub. L. 116–260, div. EE, title I, § 105(c), Dec. 27, 2020, 134 Stat. 3041, provided that: “The
Amendments
made by this section [amending this section] shall apply to taxable years ending after the date of the enactment of this Act [Dec. 27, 2020].”
Effective Date
of 2019 Amendment Pub. L. 116–94, div. Q, title I, § 112(c), Dec. 20, 2019, 133 Stat. 3229, provided that: “The amendment made by this section [amending this section] shall apply to expenditures paid or incurred during taxable years beginning after December 31, 2017.”
Effective Date
of 2018 Amendment Pub. L. 115–123, div. D, title I, § 40302(b), Feb. 9, 2018, 132 Stat. 145, provided that: “(1) In general.—The amendment made by this section [amending this section] shall apply to expenditures paid or incurred in taxable years beginning after
December 31, 2016. “(2) Safe harbor assignments.—Assignments, including related expenditures paid or incurred, under paragraph (2) of section 45G(b) of the Internal Revenue Code of 1986 for taxable years ending after
January 1, 2017, and before
January 1, 2018, shall be treated as effective as of the close of such taxable year if made pursuant to a written agreement entered into no later than 90 days following the date of the enactment of this Act [Feb. 9, 2018].”
Effective Date
of 2015 Amendment Pub. L. 114–113, div. Q, title I, § 162(c), Dec. 18, 2015, 129 Stat. 3066, provided that: “(1) Extension.—The amendment made by subsection (a) [amending this section] shall apply to expenditures paid or incurred in taxable years beginning after
December 31, 2014. “(2) Modification.—The amendment made by subsection (b) [amending this section] shall apply to expenditures paid or incurred in taxable years beginning after
December 31, 2015.”
Effective Date
of 2014 Amendment Pub. L. 113–295, div. A, title I, § 116(b), Dec. 19, 2014, 128 Stat. 4014, provided that: “The amendment made by this section [amending this section] shall apply to expenditures paid or incurred in taxable years beginning after December 31, 2013.”
Effective Date
of 2013 Amendment Pub. L. 112–240, title III, § 306(b), Jan. 2, 2013, 126 Stat. 2329, provided that: “The amendment made by this section [amending this section] shall apply to expenditures paid or incurred in taxable years beginning after December 31, 2011.”
Effective Date
of 2010 Amendment Pub. L. 111–312, title VII, § 734(b), Dec. 17, 2010, 124 Stat. 3318, provided that: “The amendment made by this section [amending this section] shall apply to expenditures paid or incurred in taxable years beginning after December 31, 2009.”
Effective Date
of 2008 Amendment Pub. L. 110–343, div. C, title III, § 316(c)(1), Oct. 3, 2008, 122 Stat. 3872, provided that: “The amendment made by subsection (a) [amending this section] shall apply to expenditures paid or incurred during taxable years beginning after December 31, 2007.”
Effective Date
of 2006 Amendment Pub. L. 109–432, div. A, title IV, § 423(b), Dec. 20, 2006, 120 Stat. 2973, provided that: “The amendment made by this section [amending this section] shall take effect as if included in the amendment made by section 245(a) of the American Jobs Creation Act of 2004 [Pub. L. 108–357].”
Effective Date
of 2005 AmendmentAmendment by Pub. L. 109–135 effective as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which such amendment relates, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.
Effective Date
Section applicable to taxable years beginning after Dec. 31, 2004, see section 245(e) of Pub. L. 108–357, set out as an
Effective Date
of 2004 Amendment note under section 38 of this title. Safe Harbor Assignments Pub. L. 116–94, div. Q, title I, § 112(b), Dec. 20, 2019, 133 Stat. 3228, provided that: “Any assignment, including related expenditures paid or incurred, under section 45G(b)(2) of the Internal Revenue Code of 1986 for a taxable year beginning on or after
January 1, 2018, and ending before
January 1, 2020, shall be treated as effective as of the close of such taxable year if made pursuant to a written agreement entered into no later than 90 days following the date of the enactment of this Act [Dec. 20, 2019].”
Reference
Citations & Metadata
Citation
26 U.S.C. § 45G
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73