HB297 Alabama 2022 Session

Summary

Primary Sponsor

Rod Scott

Democrat

Session

Regular Session 2022

Title

Railroad Modernization Act of 2019, to change the administering agency from Dept. of Commerce to the Dept. of Revenue for the tax credit program, annual cap on income tax credits increased, sunset date extended for five years through tax year 2027, Secs. 37-11C-2, 37-11C-3, 37-11C-4, 37-11C-5, 37-11C-6 am'd.

Summary

HB297 moves railroad rehabilitation tax credits to the Department of Revenue, increases annual credits, and extends the program through 2027.

What This Bill Does

It transfers administration of the railroad rehabilitation tax credit from the Department of Commerce to the Department of Revenue and creates a dedicated Railroad Rehabilitation Income Tax Credit Account funded from Education Trust Fund sales tax revenues. It keeps a 50% credit for eligible railroad rehabilitation expenditures, with per-mile caps (3,500 dollars per mile for 2019-2022; 4,100 dollars per mile for 2023-2027) and sets annual reserve caps that rise over time. It allows credits to be transferred at least 85% of value, outlines a transfer process with fees, and requires annual reporting on the program’s economic impact; credits are to be claimed in the year the work is completed, with entity-level treatment for certain pass-through entities.

Who It Affects

• Eligible railroads in Alabama (Class II and Class III) that own or lease railroad infrastructure and may qualify for and claim the credit against Alabama income tax.
• Taxpayers who receive credits through transfer (transferees), including partnerships, LLCs, S corporations, trusts, or estates, who can use the transferred credits to offset their Alabama income tax.

Key Provisions

• Provision 1: Administration, funding, and transfer rules — the credit program moves to the Department of Revenue, creates the Railroad Rehabilitation Income Tax Credit Account funded from Education Trust Fund revenues, establishes a transfer framework with a minimum value of 85%, requires transfer documentation and a $1,000 transfer fee per transferee, and outlines reservation/issuance and reporting requirements.
• Provision 2: Credit amount, caps, and sunset — the credit remains 50% of eligible expenditures with per-mile caps of $3,500 (2019-2022) and $4,100 (2023-2027); annual and total reservation caps rise over time (e.g., $3.7M annually through 2022, up to $11.1M total by 2022; $4.5M annually through 2027, up to $22.5M total by 2027); credits are claimable in the year expenditures are completed, with entity-level treatment for certain entities, and the sunset is extended through tax year 2027.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation