House Bill 190 Alabama 2026 Session

Summary

Primary Sponsor

Alan BakerRepresentative

Republican

Session

2026 Regular Session

Title

Railroad Modernization Act of 2019, to increase the cap on income tax credits and extend the sunset date for five years through tax year 2032

Summary

HB190 would expand and extend Alabama's Railroad Rehabilitation Tax Credit program by increasing per-mile credits, raising annual caps, extending the sunset to 2032, and adding transferability and funding rules.

What This Bill Does

For tax years after 2019, the bill increases the credits for railroad rehabilitation expenditures and sets per-mile caps that rise over time (3,500 per mile for 2020-2022, 4,100 per mile for 2023-2027, and 5,000 per mile for 2028-2032). It creates a Railroad Rehabilitation Income Tax Credit Account funded from Education Trust Fund sales tax revenue and allows credits to be claimed in the year the rehabilitation expenditures are completed and placed in service, with refunds if credits exceed tax liability. Credits may be transferable to other taxpayers, but at 85% of present value, and transfers are single-use with transfer fees and required documentation by the Department of Revenue.

Who It Affects

• Eligible taxpayers who own or lease railroad track in Alabama and incur qualified railroad rehabilitation expenditures; they could receive credits up to the per-mile caps and annual limits.
• Partnerships, LLCs, S corporations, trusts, or estates that receive credits must claim them at the entity level; credits can be transferred to eligible transferees and used to offset income tax, subject to transfer rules and fees.

Key Provisions

• Credit rate remains 50% of eligible expenditures; per-mile caps are 3,500 dollars (2020-2022), 4,100 dollars (2023-2027), and 5,000 dollars (2028-2032).
• Annual reserved credit caps: 3,700,000 dollars (2020-2022); 4,500,000 dollars per year (2023-2027) with a cumulative cap of 22,500,000 dollars for August 1, 2022 to August 1, 2027; 5,500,000 dollars per year (2028-2032) with a cumulative cap of 27,500,000 dollars for August 1, 2027 to August 1, 2032.
• A Railroad Rehabilitation Income Tax Credit Account is created in the Education Trust Fund; credits are funded from sales tax revenue and distributed by the Department of Revenue and Comptroller.
• Credits can be claimed in the tax year when expenditures are completed and placed in service; refundable if the credit exceeds the tax liability.
• Credits are transferable and assignable at no less than 85% present value; one-time transfer allowed; transfer fees of 1,000 dollars per transferee; transfer paperwork required; transferees may use credits to offset Chapter 18 income tax.
• Partnerships, LLCs, S corporations, trusts, or estates must claim credits at the entity level rather than passing through to owners.
• Effective date and sunset: the credit program is effective for the 2020 tax year and continues through the 2032 tax year unless extended; June 1, 2026 is the act's effective date.

AI-generated summary using openai/gpt-5-nano on Feb 11, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue