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House file 1697 would fix transferability error in short-line rail tax credit
Summary
A bill from Rep. Elkins would correct language in the 2023 omnibus tax law to restore predictable transferability and implementation mechanics for the short-line rail infrastructure tax credit; the committee laid the bill over for possible inclusion in the omnibus tax bill.
Representative Elkins told the Minnesota House Taxes Committee that short-line railroads across the state face major maintenance needs and that the tax credit enacted in 2023 requires technical correction to work as intended. “Short line railroads across the state collectively have maintenance and construction needs of upwards of $274,000,000 in the next 5 years,” Elkins said, adding that many lines still run on 90‑pound rail instead of today’s heavier standards.
Elkins said the 2023 law created an income tax credit—the Short Line Infrastructure Modernization (SLIM) credit—equal to 50% of qualified short‑line railroad construction or replacement expenditures, capped per track mile. The standalone bill he originally carried in 2023 had allowed an eligible taxpayer to transfer the credit “by written agreement to an eligible transferee at any time during the 5 years following the taxable year in which the qualified expenditures are incurred.” He said the 2023 omnibus version inadvertently changed that language, which affected the timing and certainty lenders and investors need to finance large rail projects.
“To transferability is a critical component of the program, since it serves as a mechanism to finance expensive rail infrastructure improvements,” Elkins said. He told the committee the departments of revenue and transportation and railroad industry representatives worked on a fix and that House File 1697 would make MnDOT responsible for issuing a certificate that documents the transferable amount before a taxpayer claims or carries forward the credit.
A department representative offered to answer questions but gave no further testimony. Committee members did not propose amendments. Elkins renewed his motion that House File 1697 be laid over for possible inclusion in the omnibus tax bill; the committee voice‑voted “aye.”
The committee record shows the change is supported by the Minnesota Regional Railroads Association and included in the governor’s budget recommendations, according to Elkins’ remarks. The bill would not change the credit percentage or per‑mile cap described in the 2023 language; it addresses the mechanism and timing of transfers so that railroads can use the credit as intended to finance capital projects.
The committee laid the bill over for possible inclusion; no formal roll‑call vote on final passage occurred during the hearing.
