H.R. 516: To amend the Internal Revenue Code of 1986 to modify the railroad track maintenance credit.
Sponsor
Mike Kelly
Republican · PA-16
Bill Progress
Latest Action · Jan 16, 2025
Referred to the House Committee on Ways and Means.
Why it matters
$3,500 per mile. That's the current federal tax credit for maintaining railroad track — a number set years ago that hasn't budged while steel, ballast, and labor costs have surged. H.R. 516 would raise the cap to $6,100 per mile and index it to inflation going forward, giving short line railroads the first real update to their maintenance subsidy in nearly a decade.
H.R. 516 amends Internal Revenue Code Section 45G, the short line railroad track maintenance credit. Two changes carry the weight of the bill.
First, the per-mile credit cap jumps from $3,500 to $6,100. That's a 74% increase for every mile of eligible track where a railroad spends money on maintenance — ties, rail, ballast, bridges, drainage, the physical infrastructure that keeps trains moving safely.
Second, the bill adds an inflation adjustment. Starting in tax years after 2025, the $6,100 figure would automatically rise with the cost-of-living index, rounded to the nearest $100. Without this provision, the credit would start losing value the moment it passed — exactly the problem that eroded the old $3,500 cap.
The bill also updates the qualifying-expense reference date from January 1, 2015, to January 1, 2024. In practice, this means railroads that acquired or leased track after 2015 can now claim the credit on maintenance spending for those lines. The old cutoff locked out any track brought into service in the last decade.
All changes apply to expenditures in tax years beginning after December 31, 2024.
What does H.R. 516 do?
Credit nearly doubles to $6,100 per mile
The maximum tax credit for qualified railroad track maintenance spending rises from $3,500 to $6,100 per mile of track — a 74% increase designed to match what it actually costs to maintain short line rail today.
Inflation indexing prevents future erosion
Starting in tax years after 2025, the $6,100 cap adjusts automatically with the cost-of-living index. Increases round to the nearest $100, keeping the credit simple to calculate while protecting its purchasing power.
Reference date moves forward nine years
The eligibility cutoff for qualifying maintenance expenses shifts from January 1, 2015, to January 1, 2024. Railroads that acquired or leased track in the last decade can now claim the credit.
Retroactive to 2025 tax year
The changes apply to expenditures paid or incurred in taxable years beginning after December 31, 2024 — meaning railroads filing their 2025 taxes could already benefit.
Who benefits from H.R. 516?
Short line railroads
Roughly 600 short line and regional railroads operate about 47,000 miles of track in the U.S. They'd receive a substantially larger credit toward the cost of maintaining rail, ties, ballast, and bridges — the infrastructure that keeps freight moving on low-volume lines.
Farmers, manufacturers, and shippers on local rail
Grain elevators, chemical producers, paper mills, and small manufacturers that depend on short line service for first- and last-mile freight could see more reliable track and fewer service disruptions.
Rural communities connected by rail
Towns that rely on short line railroads for economic vitality — jobs, commodity access, supply chain connectivity — benefit when deferred maintenance gets funded instead of accumulating until a line shuts down.
Who is affected by H.R. 516?
Federal revenue
A 74% credit increase plus inflation indexing means the government would collect less tax from eligible railroads. No CBO score is available yet, but the revenue impact will be central to the bill's path through Ways and Means.
The IRS
The IRS would need to administer the new credit amount, track annual inflation adjustments, and process claims under the updated reference date.
Class I railroads and their short line partners
Large railroads that connect with short line operators could see indirect benefits from improved track conditions at interchange points, reducing delays and damage claims.
H.R. 516 Common Questions
How much would the railroad track maintenance tax credit increase under H.R. 516?
From $3,500 to $6,100 per mile of track — a 74% increase. The credit applies to qualified maintenance spending like replacing ties, rail, and ballast.
Does H.R. 516 adjust the rail credit for inflation?
Yes. Starting in tax years after 2025, the $6,100 cap rises automatically with the cost-of-living index. Increases round to the nearest $100.
When would the higher railroad maintenance tax credit take effect?
The new credit applies to maintenance expenses paid in taxable years beginning after December 31, 2024 — so railroads filing 2025 returns could already benefit if the bill becomes law.
What is the short line railroad tax credit (Section 45G)?
It is a federal tax credit under Internal Revenue Code Section 45G that reimburses short line and regional railroads for track maintenance spending. H.R. 516 raises the per-mile cap and adds inflation protection.
Why does H.R. 516 change the reference date from 2015 to 2024?
The old cutoff meant railroads that acquired or leased track after January 1, 2015, could not claim the credit for maintenance on those lines. Moving the date to 2024 opens eligibility for track brought into service over the last decade.
Who can claim the short line railroad tax credit?
Railroad owners or lessees who spend money maintaining track on short line and regional railroads. Class I railroads that assign track miles to eligible operators can also generate credits through those assignments.
How many cosponsors does H.R. 516 have?
155 cosponsors from both parties as of March 2026 — making it one of the most broadly supported tax bills in the 119th Congress.
Does H.R. 516 create a new railroad grant program?
No. It expands an existing tax credit, not a spending program. Eligible railroads reduce their tax bill based on how much they spend on track maintenance — the federal government does not write a check.
Based on H.R. 516 bill text
HR516 Legislative Journey
House: Committee Action
Jan 16, 2025
Referred to the House Committee on Ways and Means.
About the Sponsor
Mike Kelly
Republican, Pennsylvania's 16th congressional district · 15 years in Congress
Committees: Ways and Means
View full profile →
Cosponsors (155)
This bill has 155 cosponsors: 60 Democrats, 95 Republicans, reflecting bipartisan support. Cosponsors represent 40 states: Alaska, Alabama, Arkansas, and 37 more.
Mike Thompson
Democrat · CA
John Moolenaar
Republican · MI
Rick Allen
Republican · GA
Claudia Tenney
Republican · NY
Dusty Johnson
Republican · SD
Christopher Smith
Republican · NJ
Rudy Yakym
Republican · IN
Julia Brownley
Democrat · CA
Darin LaHood
Republican · IL
Sheila Cherfilus-McCormick
Democrat · FL
Troy Nehls
Republican · TX
Vicente Gonzalez
Democrat · TX
Cosponsor Coverage Map
Committee Sponsors
Ways and Means Committee
22 of 45 committee members cosponsored
12 Republicans across this committee haven't cosponsored yet. Mobilize their constituents
What laws does H.R. 516 change?
2 changes
Sections Amended
Section 45G of such Code
adding at the end the following new subsection: ``(f) Inflation Adjustment
Section 45G(d) of Internal Revenue Code of 1986
striking ``January 1, 2015'' and inserting ``January 1, 2024''
H.R. 516 Quick Facts
- Committee
- Ways and Means
- Chamber
- House
- Policy
- Taxation
- Introduced
- Jan 16, 2025
Referred to the House Committee on Ways and Means.
Jan 16, 2025
Official Sources
Official bill page with full text, actions, 155 cosponsors, and committee activity for H.R. 516 — the Short Line Railroad Tax Credit Modernization Act.
Senate companion bill to H.R. 516, also amending the railroad track maintenance credit under Section 45G of the Internal Revenue Code.
The actual statute H.R. 516 amends — the current Section 45G of the Internal Revenue Code establishing the railroad track maintenance credit at $3,500 per mile.
The IRS form eligible taxpayers use to claim the Section 45G credit for qualified railroad track maintenance expenditures. Includes filing instructions and eligibility rules.
Detailed IRS instructions for calculating and claiming the railroad track maintenance credit — covers eligible taxpayers, qualifying expenditures, and track mile assignments.
The federal agency that defines Class II and Class III railroad classifications — the carriers eligible for the Section 45G tax credit H.R. 516 expands.
Current revenue thresholds that define Class I, II, and III railroads — the Class II/III boundary is $48.2M (2024), determining which carriers qualify for the Section 45G credit.
The committee where H.R. 516 was referred on January 16, 2025. All tax legislation originates here — the bill needs committee action before reaching the House floor.
Who is lobbying on H.R. 516?
10 organizations lobbying on this bill
OMNITRAX, INC. | 10 |
IOWA INTERSTATE RAILROAD, LTD | 8 |
PATRIOT RAIL COMPANY (FKA PIONEER LINES (FKA PIONEER RAILCORP)) | 8 |
P&L TRANSPORTATION, INC. (FKA APPALACHIAN & OHIO RAILROAD, INC.) | 8 |
RED RIVER VALLEY & WESTERN RAILROAD COMPANY | 8 |
AMERICAN SHORT LINE AND REGIONAL RAILROAD ASSOCIATION | 5 |
ANACOSTIA RAIL HOLDINGS COMPANY | 3 |
TWIN CITIES & WESTERN RAILROAD COMPANY | 3 |
ALASKA RAILROAD CORP | 1 |
KOPPERS, INC. | 1 |
Showing 1-10 of 10 organizations
H.R. 516 Bill Text
“To amend the Internal Revenue Code of 1986 to modify the railroad track maintenance credit.”
Source: U.S. Government Publishing Office
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