LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 6560 NOTE PREPARED: Dec 19, 2024
BILL NUMBER: SB 292 BILL AMENDED:
SUBJECT: Short Line Railroad Tax Credit.
FIRST AUTHOR: Sen. Doriot BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State
DEDICATED
FEDERAL
Summary of Legislation: The bill allows a taxpayer to claim a credit against state income tax liability for
certain qualified railroad expenditures and qualified new rail infrastructure expenditures. It specifies the
amount of the credit. The bill also limits the total amount of credits that may be allowed in a state fiscal year
to: (1) $9.5 M for qualified railroad expenditures; and (2) $10 M for qualified new rail infrastructure
expenditures.
Effective Date: January 1, 2025 (retroactive).
Explanation of State Expenditures: Department of State Revenue (DOR): The DOR would incur additional
administrative costs in implementing the tax credit established by the bill. DOR would have to revise tax
forms, instructions, and software to reflect the changes made by the bill. DOR would also be required to
certify credits and payments of qualified expenditures. The DOR’s current level of resources should be
sufficient to implement these changes.
Explanation of State Revenues: The bill establishes an income tax credit for Class II or Class III railroad
companies and owners or lessees of adjacent rail siding, industrial spurs, or industrial track. The credit is
equal to 50% of the cost of qualifying expenses for both new rail infrastructure projects and for maintenance,
reconstruction, or replacement of existing railroad infrastructure. The tax credit would reduce General Fund
revenues by no more than the capped credit amount of $19.5 M beginning in FY 2026.
The tax credit will reduce the tax liability for eligible taxpayers beginning in tax year 2025. The maximum
credit amount for new rail infrastructure projects may not exceed $500,000 per project. The cap on total
annual credit amount for new rail infrastructure projects is $10 M. The maximum credit amount per taxpayer
for the maintenance, reconstruction, or replacement of existing railroad infrastructure may not exceed the
total miles of rail owned or leased by the taxpayer multiplied by $5,000. The cap on the total annual credit
amount for existing rail lines is $9.5 M.
The tax credit can be applied to Adjusted Gross Income Tax. Credits in excess of the taxpayer’s state tax
liability may be carried forward for up to five years following the taxable year the credit is first claimed. The
SB 292 1 taxpayer may also assign any part of the credit. The credit is not refundable and may not be carried back.
Additional Information - As of 2021, one Class II railroad and 38 Class III railroads operated a combination
of 1,549 miles of owned or leased rail in Indiana. The State Rail Plan reports annual funding of Industrial
Rail Service Fund grants of $2.6 M for rehabilitation projects. The tax credit for qualified railroad
expenditures may not be claimed on expenditures for maintenance, reconstruction, or replacement which
receive a federal tax credit or are funded by a state or federal grant.
Explanation of Local Expenditures:
Explanation of Local Revenues:
State Agencies Affected: Department of State Revenue.
Local Agencies Affected:
Information Sources: Indiana Department of Transportation. 2021 Indiana State Rail Plan.
https://www.in.gov/indot/files/INDOT_SRP_Combined_FINAL_Nov-2021-INDOT-website.pdf
Fiscal Analyst: Camille Tesch, 317-232-5293.
SB 292 2