Freight RAILCAR Act of 2025
Sponsored By: Senator Banks, Jim [R-IN]
Introduced
Summary
A 10% freight railcar modernization tax credit would encourage railroads to replace and upgrade cars. The credit would equal 10 percent of qualifying replacement and modernization costs, be claimed as a business credit, and apply to property placed in service during a three-year window with a hard per-taxpayer cap of 1,000 qualified railcars.
Show full summary
- Rail operators and fleet owners would get a tax incentive to speed fleet turnover by replacing or modernizing cars. Newly built replacement railcars must replace two scrapped cars to qualify, which targets removal of older equipment.
- Manufacturers could gain more orders because qualified freight railcars must be built in a "qualified facility" that is not owned or leased by entities ineligible for federal rail contracts under 49 U.S.C. 5323(u).
- The credit is treated under existing business-credit rules and includes limits to prevent double benefits, reduces the railcar tax basis by the credit amount, and adds sale-leaseback and syndication rules to govern complex deals.
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Bill Overview
Analyzed Economic Effects
1 provisions identified: 0 benefits, 0 costs, 1 mixed.
New freight railcar tax credit
This bill would create a 10% business tax credit for qualifying freight railcar purchases and modernizations. You could count at most 1,000 qualified railcars per taxpayer each year. If you claim the credit, the railcar's tax basis must be reduced by the credit amount, which lowers future depreciation. The credit would apply only to property placed in service and amounts paid after December 31, 2024, and it would end three years after enactment. The bill also adds timing and anti‑abuse rules that can delay when the credit is claimed and makes the credit part of the regular list of business credits.
Sponsors & CoSponsors
Sponsor
Banks, Jim [R-IN]
IN • R
Cosponsors
Sen. Coons, Christopher A. [D-DE]
DE • D
Sponsored 9/10/2025
Sen. Merkley, Jeff [D-OR]
OR • D
Sponsored 5/13/2026
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov