Railroad Modernization Act

Section 37-11C-4 of the Code of Alabama provides for a refundable tax credit equal to 50 percent of an eligible taxpayer’s qualified railroad rehabilitation expenditures.

The Alabama Department of Commerce is the administering agency for the Rail Credit. For more information regarding eligibility and qualifications, please contact incentives@commerce.alabama.gov or 334-242-0400.  For additional information on the credit, please click here.

Provisions of the Rail Credit include:

• The rail credit is a refundable or transferable credit for an eligible railroad company.
• The rail credit must be claimed at the entity level; therefore, the credit cannot be passed through to partners, members, or owners of pass-through entities.
• Any transferred rail 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 tax credit may be claimed by the taxpayer in the taxable year in which the qualified railroad rehabilitation expenditures are completed and placed in service.
• The credit is capped at $3.7 million annually for calendar years 2020 through 2022, with an aggregate credit cap of $11.1 million.