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Railroad Modernization Act

  • Railroad Modernization Act

Section 37-11C-1 through Section 37-11C-6, Code of Alabama 1975

Section 37-11C-4 of the Code of Alabama provides for a refundable tax credit equal to 50% of an eligible taxpayer’s qualified railroad rehabilitation expenditures.

The Alabama Department of Commerce is the administering agency for the Rail Credit. For more information regarding eligibility and qualifications, please contact incentives@commerce.alabama.gov or 334-242-0400.

Please be advised that the provisions and procedures outlined below predate the passing of Act 2022-341. Updated information and procedures affecting tax years beginning after December 31, 2022, is forthcoming.

Provisions of the Rail Credit include:

  • The rail credit is a refundable or transferable credit for an eligible railroad company.
  • The rail credit must be claimed at the entity level; therefore, the credit cannot be passed through to partners, members, or owners of pass-through entities.
  • Any transferred rail credit can be utilized against corporate income tax, fiduciary tax, and individual income taxpayers; however, the transferred credit is not refundable and cannot be carried forward to any subsequent year.
  • The tax credit may be claimed by the taxpayer in the taxable year in which the qualified railroad rehabilitation expenditures are completed and placed in service.
  • The credit is capped at $3.7 million annually for calendar years 2020 through 2022, with an aggregate credit cap of $11.1 million.

To utilize the credit on the income tax return, a credit claim request must be made via My Alabama Taxes.

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