HB457 Alabama 2019 Session

Summary

Primary Sponsor

Rod Scott

Democrat

Session

Regular Session 2019

Title

Taxation, tax credits, Railroad Modernization Act, state income tax credit authorized for qualified railroad reconstruction or replacement expenditures

Summary

HB 457 creates a five-year, transferable 50% state income tax credit for qualified railroad reconstruction or replacement expenditures by Class II/III railroads in Alabama, with a per-mile cap and sunset after 2024.

What This Bill Does

The bill would authorize a state income tax credit equal to 50% of eligible railroad reconstruction or replacement expenditures in Alabama, including maintenance and new construction of railroad infrastructure, but not for amounts previously deducted. The credit is capped at $3,500 per mile of track owned or leased in Alabama and is nonrefundable. Credits can be transferred to another eligible taxpayer under specified rules, with a one-time transfer and a $1,000 transfer fee, and unused credits may be carried forward for five years. For entities like partnerships or LLCs, the credit can pass through to owners, and the credit is available for tax years 2020 through 2024.

Who It Affects

• Eligible railroads (Class II/III) operating in Alabama can claim a credit for qualified expenditures.
• Taxpayers subject to Alabama income tax who receive the credit via transfer can use the credit to offset their income tax (nonrefundable).
• Partnerships, LLCs, and other pass-through entities can claim the credit at the entity level and pass it to partners or owners.

Key Provisions

• Creates The Railroad Modernization Act of 2019 and a state income tax credit for eligible expenditures on railroad reconstruction or replacement.
• Eligible taxpayer: a railroad classified as Class II or Class III by the U.S. Surface Transportation Board; eligible expenditures include maintenance, reconstruction, replacement, and new construction of railroad infrastructure owned or leased in Alabama; excludes expenditures that have already been deducted.
• Credit equals 50% of eligible expenditures, capped at $3,500 per mile of track owned or leased in Alabama; nonrefundable.
• Credit transferable to another eligible taxpayer under a written transfer agreement; transfer is one-way, cannot be transferred again, and requires filing with the Department of Revenue plus a $1,000 transfer fee.
• Unused credit can be carried forward for five tax years after qualification; credits for partnerships/LLCs pass through to owners.
• Department of Transportation will adopt rules to verify expenditures and issue a certificate of verification; confidentiality provisions apply to submission data; aggregate information may be provided to the Legislature.
• Effective for tax years 2020 through 2024 unless extended by the Legislature; active date is the first day of the third month after passage.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation