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Railroad Rehabilitation Income Tax Credit

  • Railroad Rehabilitation Income Tax Credit


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

Income tax credit for an eligible taxpayer that incurs expenditures related to the maintenance, reconstruction, or replacement of railroad infrastructure, including rehabilitation of tracks, roadbeds, bridges, signaling systems and train controls, industrial leads, and track-related structures within the state.

Income tax credit for railroad rehabilitation is equal to a refundable credit of 50% of the eligible taxpayer’s qualified railroad rehabilitation expenditure. The credit must be claimed at the entity level; therefore, the credit cannot be passed through to partners, members, or owners of pass-through entities. The credit is transferable for an eligible railroad company and any transferred 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 credit is capped at $3.7 million annually for calendar years 2020 through 2022, with an aggregate credit cap of $11.1 million. For calendar years 2023 through 2027, the annua credit is capped at $4.5 million with an aggregate cap of $22.5 million.


The Commissioner of Revenue will annually distribute the funds in the Railroad Rehabilitation Income Tax Credit Account, set up in the Education Trust Fund, to qualifying rail companies.