SB185 Alabama 2019 Session

Summary

Primary Sponsor

Bobby D. SingletonSenator

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

SB 185 would create a state income tax credit for qualified railroad reconstruction or replacement costs in Alabama and allow the credit to be transferred to other taxpayers.

What This Bill Does

The bill provides a 50% state income tax credit for eligible railroad reconstruction or replacement expenditures for railroad infrastructure owned or leased in Alabama. The credit is capped at $3,500 per mile of railroad track owned or leased in the state. The credit can be transferred to an eligible transferee under specified rules, and the transferee may use it to offset their income tax; unused credits can be carried forward for five years. For partnerships, LLCs, corporations, trusts, or estates, the credit is claimed at the entity level and does not pass through to owners.

Who It Affects

• Eligible taxpayers: Class II or Class III railroads (per the U.S. Surface Transportation Board) operating in Alabama that incur qualified railroad expenditures; they can claim the credit up to the per-mile cap.
• Eligible transferees: Taxpayers who receive the credit from an eligible taxpayer via transfer; they can use the transferred credit to offset their Alabama income tax, subject to transfer rules, a $1,000 transfer fee, and required paperwork.

Key Provisions

• Creates The Railroad Modernization Act of 2019 and authorizes a state income tax credit for eligible railroad reconstruction or replacement expenditures.
• Eligible expenditures include maintenance, reconstruction, or replacement of railroad infrastructure within Alabama owned or leased by the eligible taxpayer; includes new construction of industrial leads, switches, sidings, and extensions.
• The credit equals 50% of eligible expenditures for tax years after December 31, 2019; it is not refundable if the credit exceeds tax owed.
• The credit cannot exceed $3,500 times the number of miles of railroad track owned or leased within Alabama at the end of the tax year.
• The credit may be transferred to an eligible transferee under a written transfer agreement; after transfer, only the transferee may use the credit and it may not be transferred again.
• A transfer agreement form must be used and include parties' info, amount, original year of credit, and applicable tax year(s).
• The transferring party and the transferee must jointly file a transfer notice with the Department of Revenue within 30 days of the transfer.
• For each transfer, the transferor must provide a transfer statement, a copy of the tax credit certificate, a copy of the written transfer agreement, and pay a $1,000 transfer fee to the Department of Revenue.
• Unused credit may be carried forward for up to five tax years after the year of qualification.
• Credits to partnerships, LLCs, corporations, trusts, or estates are claimed at the entity level and do not pass through to owners.
• Effective date: the act becomes law on the first day of the third month after passage and governor approval.

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