[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1200 Introduced in House (IH)]
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119th CONGRESS
1st Session
H. R. 1200
To amend the Internal Revenue Code of 1986 to provide a tax credit to
encourage the replacement or modernization of inefficient, outdated
freight railcars, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 11, 2025
Mr. LaHood (for himself, Mr. Schneider, Mr. Hudson, Ms. Sewell, Mr.
Murphy, Ms. Van Duyne, Mr. Valadao, Mr. Nehls, Mr. Bost, Mr. Hern of
Oklahoma, Mrs. Miller of West Virginia, Mr. Van Orden, Mr. Carey, Mr.
Carter of Louisiana, Mr. Bishop, Mr. Boyle of Pennsylvania, Mrs. Bice,
Mr. Weber of Texas, Mr. Bacon, Mr. Ciscomani, Ms. Bonamici, Mr. Hunt,
Mr. Westerman, Mr. Ellzey, Ms. Titus, Mr. Panetta, Mr. Moran, Mr.
Williams of Texas, Mr. Rouzer, Mr. Crawford, Ms. Sanchez, Mrs. Miller-
Meeks, Ms. Davids of Kansas, Mr. Goldman of Texas, Mr. Rogers of
Alabama, Mr. Diaz-Balart, Mr. Mann, Mr. Tony Gonzales of Texas, Mr.
Fong, Mr. Cuellar, and Mr. Pfluger) introduced the following bill;
which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide a tax credit to
encourage the replacement or modernization of inefficient, outdated
freight railcars, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Freight Rail Assets Investment to
Launch Commercial Activity Revitalization Act of 2025'' or the
``Freight RAILCAR Act of 2025''.
SEC. 2. FREIGHT RAILCAR MODERNIZATION CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 45BB. FREIGHT RAILCAR MODERNIZATION CREDIT.
``(a) In General.--For purposes of section 38, the freight railcar
modernization credit determined under this section for the taxable year
is an amount equal to 10 percent of the taxpayer's freight railcar
fleet modernization expenses.
``(b) Limitation.--No more than 1,000 qualified freight railcars
per taxpayer may be taken into account for purposes of determining the
credit under subsection (a) with respect to a taxable year.
``(c) Definitions.--For purposes of this section--
``(1) Freight railcar fleet modernization expenses.--The
term `freight railcar fleet modernization expenses' means the
sum of the qualifying railcar replacement and modernization
amount.
``(2) Qualifying railcar replacement and modernization
amount.--The term `qualifying railcar replacement and
modernization amount' means--
``(A) the basis of any qualified newly built
replacement railcar placed in service by the taxpayer
during the taxable year, plus
``(B) the qualified railcar modernization
expenditures of the taxpayer for the taxable year.
``(3) Qualified newly built replacement railcar.--The term
`qualified newly built replacement railcar' means a qualified
freight railcar which--
``(A) is built after the date of the enactment of
this section,
``(B) is ordered or originally placed in service
before the date that is three years after the date of
the enactment of this section, and
``(C) replaces two freight railcars owned by the
taxpayer that--
``(i) were in service within the 48 months
preceding the beginning of the taxable year,
and
``(ii) which were both scrapped and
permanently removed from the AAR Umler System
master file during such taxable year.
``(4) Qualified freight railcar.--
``(A) In general.--The term `qualified freight
railcar' means a freight railcar that--
``(i) is either acquired or modernized by
the taxpayer after the date of the enactment of
this section,
``(ii) meets the significant improvement
requirements for capacity, fuel efficiency, or
performance of subparagraph (B),
``(iii) was built in a qualified facility,
and
``(iv) with respect to which no credit
under this section was previously claimed by
any taxpayer.
``(B) Significant improvement.--For purposes of
this paragraph, an improvement in capacity or fuel
efficiency and performance with respect to a modernized
freight railcar is a significant improvement if--
``(i) such capacity or fuel efficiency, as
the case may be, is increased by at least 8
percent, or
``(ii) in the case of performance, the
qualified freight railcar meets the
requirements of the Association of American
Railroads Standard S-286 or is modernized to
meet the design standards set forth in final
rule HM-251 of the Pipeline and Hazardous
Materials Safety Administration (as amended by
HM-251C).
``(C) Modernized.--The term `modernized' means
modified, retrofitted, converted or rebuilt for the
purpose of meeting the significant improvement criteria
of subparagraph (B).
``(5) Qualified railcar modernization expenditure.--The
term `qualified railcar modernization expenditure' means any
amount paid or incurred--
``(A) in connection with the modernization of a
freight railcar resulting in such railcar being
designated a qualified freight railcar, and
``(B) which is properly chargeable to a capital
account with respect to such freight railcar.
``(6) Qualified facility.--The term `qualified facility'
means a facility that is not owned or leased by an entity that
would be ineligible for an award of a contract or subcontract
under 49 U.S.C. 5323(u).
``(d) Special Rules.--
``(1) Denial of double benefit.--No credit shall be allowed
under subsection (a) for any expense for which a deduction or
credit is allowed under any other provision of this chapter.
``(2) Basis adjustment.--For purposes of this subtitle, if
a credit is allowed under subsection (a) with respect to any
qualified freight railcar, the basis of such railcar shall be
reduced by the amount of the credit so allowed.
``(3) Sale-leaseback.--For purposes of subsection (a), if
any qualified freight railcar is--
``(A) originally placed in service by a person
after the date of the enactment of this section, and
``(B) sold and leased back by such person within 3
months after such railcar is originally placed in
service (or, in the case of more than one railcar
subject to the same lease, within 3 months after the
date the final railcar is placed in service, so long as
the period between the time the first railcar is placed
in service and the time the last railcar is placed in
service does not exceed 24 months), such railcar shall
be treated as originally placed in service not earlier
than the date on which such railcar is used under the
leaseback referred to in this paragraph.
``(4) Syndication.--For purposes of subsection (a), if--
``(A) any qualified freight railcar is originally
placed in service after the date of enactment of this
section by the lessor of such railcar,
``(B) such railcar is sold by such lessor or any
subsequent purchaser within 3 months after the date
such railcar was originally placed in service (or, in
the case of more than one railcar subject to the same
lease, within 3 months after the date the final railcar
is placed in service and the time the last railcar is
placed in service does not exceed 12 months), and
``(C) the user of such railcar after the last sale
during such 3-month period remains the same as when
such railcar was originally placed in service, such
railcars shall be treated as originally placed in
service not earlier than the date of such last sale.
``(5) Entities owned or controlled by state-owned
enterprises ineligible.--No credit under subsection (a) shall
be allowed to any taxpayer that would be ineligible for an
award of a contract or subcontract under 49 U.S.C. 5323(u).
``(e) Termination.--This section shall not apply to any qualifying
railcar replacement and modernization amount after the date that is
three years after the date of the enactment of this section.''.
(b) Credit Allowed as Business Credit.--Section 38(b) of the
Internal Revenue Code of 1986 (relating to current year business
credit) is amended by striking ``plus'' at the end of paragraph (40),
by striking the period at the end of paragraph (41) and inserting ``,
plus'' and by inserting at the end thereof the following new paragraph:
``(42) the freight railcar modernization credit determined
under section 45BB.''.
(c) Coordination With Section 55.--Section 38(c)(4)(B) of the
Internal Revenue Code of 1986 is amended by redesignating clauses (x),
(xi), and (xii) as clauses (xi), (xii), and (xiii), respectively, and
by inserting after clause (ix) the following new clause:
``(x) the freight railcar modernization
credit determined under section 45BB,''.
(d) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after the item relating to section 45AA
the following new item:
``Sec. 45BB. Freight railcar modernization credit.''.
(e) Effective Date.--The amendments made by this section shall
apply to property placed in service, and amounts paid or incurred,
after December 31, 2024.
SEC. 3. REPORT ON THE FREIGHT RAILCAR MODERNIZATION CREDIT.
(a) In General.--Not later than 3 years after the date of the
enactment of this Act, the Secretary of the Treasury (or the
Secretary's delegate), shall submit to the Committee on Ways and Means
of the House of Representatives and the Committee on Finance of the
Senate a report on activity with respect to the qualified freight
railcar credit under section 45BB of the Internal Revenue Code of 1986.
(b) Report Contents.--The report submitted under subsection (a)
shall contain information with respect to the following:
(1) The number of times the credit was claimed.
(2) The number of railcars scrapped as a result of the
credit.
(3) The number of new railcars entered into contract as a
result of the credit.
(4) The number of new railcars built as a result of the
credit.
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