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Short Line Railroad Infrastructure Modernization Credit
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You may qualify for the Short Line Railroad Infrastructure Modernization Credit if you are a Class II or Class III railroad with qualifying railroad reconstruction or replacement expenses in Minnesota.
The credit is available for qualified expenses incurred between January 1, 2023, and December 31, 2030, for tax years beginning after December 31, 2022.
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To be eligible for the credit, you must be a Class II or Class III railroad as classified by the United States Surface Transportation Board and have incurred qualifying reconstruction or replacement expenses in the taxable year for maintenance, reconstruction, or replacement of railroad infrastructure, including track, roadbed, bridges, industrial leads and sidings, and track-related structures owned or leased in Minnesota.
The credit is the lesser of either:
- 50% of eligible expenses
- $3,000 multiplied by the number of miles you own or lease in Minnesota and for which you have qualifying expenditures
This credit is nonrefundable. If your credit exceeds your tax liability, you can carryover the excess for up to five tax years, beginning with the earliest tax year to which it may be carried.
Complete Schedule RAIL to claim the credit. The credit can be claimed against the income tax or insurance premiums tax, but not both, for the same qualified railroad reconstruction or replacement expenditures.
Use this table to determine which form to claim the credit:
| If you're a | Include credit on |
|---|
| C corporation | Form M4T, line 15 |
| S corporation | Form M8, line 11 |
| Partnership | Form M3, line 10 |
| Sole proprietor | Schedule M1C, line 14 |
| Fiduciary | Form M2, line 20 |
| Insurance company | Form M11, line 28 |
Any remaining credit from S corporations or Partnerships may be passed through to partners and shareholders.
You may transfer the unused, remaining portion of the credit to one other transferee (Minnesota insurance or income tax taxpayer) by written agreement. You must file a copy of the written transfer agreement with the Department of Revenue within 30 days of the transfer.
The transfer agreement must contain:
- The names, addresses, and tax identification numbers of both parties
- The tax year you incurred the qualified expenditures
- The amount of credit being transferred
- The tax years the transferred credit may be claimed
We will issue a credit certificate to the transferee within 30 days of the filing.
