Illinois House Bill Would Provide Shortline Railroads Financial Resources for Capital Projects
On February 6, 2025, Representative Charles Meier introduced Illinois House Bill 2832, known as the Short Line Railroad Infrastructure Modernization Act. This legislation aims to bolster the state's shortline railroads by providing financial incentives for infrastructure improvements. By offering tax credits to eligible rail companies, the bill seeks to enhance the efficiency and safety of Illinois's rail network, which is vital for connecting local industries to national and global markets.
Tax Credits as Funding Vehicle
The core provision of HB2832 is a tax credit equal to 50% of qualified railroad reconstruction or replacement expenditures incurred by eligible taxpayers during the taxable year. This credit is capped based on the number of miles of track owned or leased within the state, multiplied by a specified amount per mile. Eligible entities include Class II and Class III railroads, as classified by the United States Surface Transportation Board, as well as owners or lessees of rail sidings, industrial spurs, or industry tracks adjacent to any railroad in Illinois.
Benefits and Support for HB2832
HB2832 has garnered early support among the rail legal community, including from the Illinois State Bar Association. The Energy, Utilities, Telecommunications & Transportation Section Council has recommended supporting the bill to its members.
“The conclusion of the Council was that this is a long-overdue effort to address historic discrimination against railroads versus other modes of transportation within the state.”
If enacted, HB2832 would significantly benefit shortline railroads in Illinois by reducing the financial burden associated with infrastructure projects. The tax credits would make it more feasible for these smaller rail companies to undertake essential maintenance, upgrades, and expansions. Improved infrastructure would lead to more reliable and efficient service, attracting additional business and fostering economic growth in the regions these railroads serve.
