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 credit can be applied against corporate income tax, pass-through entities, and individual income taxpayers.
• The tax credit is applicable to tax years beginning on and after Dec. 31, 2019.
• The entire tax credit may be claimed by the taxpayer in the taxable year in which the qualified railroad rehabilitation expenditures are completed and placed into service.
• The credit may be utilized on a pro rata basis for entities taxed under Subchapter S or Subchapter K.
• Tax credits granted to a partnership, a limited liability company, S- Corporations, trusts, or estates, must be claimed at the entity level and will not pass through to the partners, members, or owners.
• The credit is capped at $3.7 million annually for calendar years 2020 through 2022, with an aggregate credit cap of $11.1 million.
• The tax credit is transferable and assignable, in full or in part.
• The credit cannot be carried forward to any subsequent year.