Railroads, vital to agricultural shippers, have received some permanent tax breaks, while biofuel manufacturers have received enhancements to tax breaks that subsidize next-generation products and the installation of mixer pumps.
The tax measures were included in the massive collective bill that Congress passed in late 2020, which also made the credit for the maintenance of railroad tracks permanent.
The credit is equal to 40% of the expenses an eligible taxpayer has paid or made for the maintenance of certain railroad tracks as per the text of the Senate Finance Committee.
The credit is equal to half of what was spent prior to January 2023 and "The product of $ 3,500 cannot exceed the number of miles of railroad track owned or rented (or assigned) by the eligible taxpayer at the end of the tax year."
The loan has resulted in $ 5 billion in infrastructure investments since 2005 – investments that, according to the American Short Line and Regional Railroad Association, would not have been possible without the loan.
With budgets already tight, ASLRRA President Chuck Baker said short-haul rail companies initially have very limited capital.
Chuck Baker, ASLRRA
"Over the years, this has put an unnecessary burden on decision-making," Baker told Agri-Pulse, citing the uncertainty of not knowing whether or not the tax credit would be extended.
According to ASLRRA, studies may have shown that the credit's incentive could lead to a 47% increase in infrastructure investment, and short-term loan extensions make projects difficult to plan and complete. Replacing a mile of track can cost up to $ 500,000.
"Grain and Ag shippers rely on short lines and this infrastructure, which takes a lot of uncertainty off the table," said Baker.
Chuck Grassley, chairman of the Senate Finance Committee, said a permanent tax credit should provide security for agricultural shippers. Rail and inland waterway routes are "very important to the efficient export of Iowa's agricultural surplus," he told reporters.
Grassley and Biofuel Groups are also pleased to extend the tax credit for second generation biofuels.
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That provision extends through the end of 2021 to the $ 1.01 per gallon non-refundable tax credit for cellulosic biofuels sold at retail in a buyer's fuel tank and second generation biofuel blends that are sold or used as fuel. Second generation fuels are made from vegetable sources of cellulose such as corn on the cob, wood chips and straw.
Ed Hubbard, general counsel and vice president of government affairs for the Renewable Fuels Association, told Agri-Pulse that the second generation biofuels tax credit is a top priority as it is important to the future growth of the industry.
Ed Hubbard, RFA
"These are key to moving forward in the future and ensuring that we diversify the raw materials that form the basis of biofuels, including ethanol," said Hubbard.
An alternative fuel home loan, extended through the end of this year, helps offset the cost of equipment that dispenses alternative fuels such as ethanol, biodiesel, natural gas, hydrogen, and electricity. Funds are capped at $ 30,000 per location for commercial property and $ 1,000 for properties installed in a primary residence.
Another loan that Hubbard was happy to see renewed, according to RFA, is the alternative fuel excise tax credit. The credit, which will be extended to the end of 2021, provides for an excise tax credit of 50 cents per gallon or a payment for alternative fuel and a credit of 50 cents per gallon for a mixture of alternative fuels.
Hubbard said the industry is still hoping for longer term security for the biofuel incentives. "Our focus on the extension has really been an attempt to maintain the status quo while Congress can ultimately begin negotiating a tax reform package," said Hubbard.
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