Washington 2023-2024 Regular Session Status: Passed Senate Bipartisan · 6 R · 2 D cosponsors

SB 5494 — Providing incentives to improve freight railroad infrastructure.

Last action — Public hearing in the Senate Committee on Ways & Means at 4:00 PM.

  1. ✓
    Introduced
  2. ✓
    In Committee
  3. 3
    Passed Senate
  4. 4
    Passed House
  5. 5
    To Executive
  6. 6
    Enacted

This bill died with 2023-2024 Regular Session. It reached “Passed Senate” and never advanced before the session ended, so it can no longer move — a new version would have to be reintroduced in the current session.

This bill is no longer active — its legislative session has ended, so there is no live prognosis. It would have to be reintroduced in the current session to move again.

Bill Text

What changed in the latest version

367 added · 577 removed

Plain-language change summary

The amended version of SB 5494 has introduced a significant change regarding tax credits for railroads. It now allows eligible taxpayers, specifically short line railroads, to receive a tax credit worth 50% of their maintenance expenditures, with a maximum annual cap linked to the miles of track they own or lease in Washington. This change is important because it provides financial support for the maintenance and development of rail infrastructure, potentially improving safety and efficiency while benefiting local economies. Additionally, some specific provisions about Class I railroads and their materials have been removed to simplify the focus on short line railroads.

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S-3942.1 SUBSTITUTE SENATE BILL 5494 State of Washington 68th Legislature 2024 Regular Session By Senate Business, Financial Services, Gaming & Trade (originally sponsored by Senators J.
S-0515.1 SENATE BILL 5494 State of Washington 68th Legislature 2023 Regular Session By Senators J.
Wilson, Liias, Schoesler, Warnick, and Holy) READ FIRST TIME 01/24/24.
Wilson, Liias, Schoesler, Warnick, and Holy Read first time 01/20/23.
Referred to Committee on Business, Financial Services, Gaming & Trade.
providing effective dates;
providing an effective date;
1 SSB 5494 NEW SECTION.
1 SB 5494 NEW SECTION.
(1) A credit is allowed against taxes due under this chapter for expenditures made by an eligible taxpayer pursuant to subsection (2) of this section.
(1) This chapter does not apply to the value of products or the gross receipts of sales derived by class I railroads for materials required for track maintenance.
The credit is subject to a maximum annual credit amount set forth in subsection (3) of this section.
(2) For the purposes of this section, the following definitions apply.
(2) Qualified expenditures incurred by an eligible taxpayer may be used to generate a credit for the following amounts:
(a) For qualified short line railroad maintenance expenditures, a credit is allowed against the taxes due under this chapter in an amount equal to 50 percent of the qualified short line railroad maintenance expenditures.
The amount of the credit earned in a calendar year may not exceed an amount equal to $3,500 multiplied by the number of miles of railroad track owned or leased in the state by the eligible taxpayer as of the close of the calendar year.
(b) For qualified new rail development expenditures, a credit is allowed against the taxes due under this chapter in an amount equal to 50 percent of the new rail development expenditures of an eligible taxpayer.
(c) For qualified railroad modernization and rehabilitation expenditures, a credit is allowed against the taxes due under this chapter in an amount equal to 50 percent of the qualified railroad modernization and rehabilitation expenditures by an eligible taxpayer.
(3) The total credit amount approved under subsection (2) of this section and section 6(2) of this act may not exceed $1,000,000 for each eligible taxpayer in a calendar year.
Credits are available on a first-in-time basis.
The department must disallow any credits, or portions thereof, that would cause the total amount of credits approved under subsection (2) of this section and section 6(2) of this act to exceed $15,000,000 during any calendar year.
(4) The credit claimed may not exceed the tax that would otherwise be due under this chapter.
Refunds may not be granted in the place of credits.
Any amount of credit earned under this section not claimed by the person in one calendar year may be carried forward for no more than five calendar years immediately following the year that the credit was earned.
(5)(a) An eligible taxpayer may transfer all or a portion of the credit approved under this section to any taxpayer subject to the tax imposed under this chapter at any time during the calendar year in p.
2 SSB 5494 which the credit is approved by the department and for five calendar years following the year that the credit is approved.
(b) To transfer all or any portion of an approved credit, the taxpayer originally allowed the credit, and the subsequent transferee, must jointly file a credit transfer application with the department.
The application must include:
(i) The names, addresses, and taxpayer identification numbers of the parties to the transfer;
(ii) The amount of the credit being transferred;
(iii) The year the credit was originally approved by the department for use by the transferring taxpayer;
(iv) The tax year or years for which the credit may be claimed;
and (v) Any other information or documents the department may require.
(c) No credit or portion thereof transferred may be transferred more than once.
(6) The department must administer the credit.
To claim or transfer a credit under this section, the person applying must complete an application for credit based on qualified expenditures incurred by the eligible taxpayer the previous calendar year.
The department must rule on applications within 60 days of receipt except that the department may extend the time of processing such application upon notice to the taxpayer and an explanation of why ruling on the application cannot be completed within such time.
(7) For the purposes of this section, the following definitions apply:
1201.1-1(a), as in effect on January 1, 2024.
1201.1-1(a), as in effect January 1, 2023.
(b) "Eligible taxpayer" means:
(b) "Materials required for track maintenance" has the same meaning as in section 5 of this act.
(i) Any railroad subject to the tax under this chapter that is classified by the United States surface transportation board as a class II or class III railroad, as defined in 49 C.F.R.
(3) This section expires June 30, 2034.
Sec.
1201.1-1(a), as in effect on January 1, 2024;
(ii) Any railroad owned by a port, city, or county in the state of Washington;
or (iii) Any owner or lessee of rail siding, industrial spur, or industry track, if the rail siding, industrial spur, or industry p.
3 SSB 5494 track is located on or adjacent to a class II or class III railroad in the state of Washington.
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(c) "Industrial spur" means a secondary track used by railroads and customers at a location to load and unload railcars without interfering with other railroad operations.
(d) "Qualified new rail development expenditures" means expenditures for new rail development by an eligible taxpayer, which includes the construction of new track, industrial leads, switches, industrial spurs, sidings, rail loading docks, and transloading structures involved with providing rail services to new customer locations or existing customer expansions in the state by an eligible taxpayer.
(e) "Qualified railroad modernization and rehabilitation expenditures" means expenditures by an eligible taxpayer to upgrade less than 90 pound rail and switches, 286,000 pound capacity rail upgrades to the mainline track, rail and tie replacement projects, track capacity enhancements, bridge rehabilitation or bridge replacement projects, natural disaster projects, or other track- related projects determined to enhance or modernize the existing track infrastructure in the state by an eligible taxpayer.
(f) "Qualified short line railroad maintenance expenditures" means expenditures for railroad infrastructure maintenance including, but not limited to, rail, ties, tie plates, joint bars, fasteners, switches, ballast, subgrade, roadbed, bridges, industrial leads, sidings, signs, safety barriers, crossing signals and gates, and related track structures owned or leased by a class II or class III railroad.
(g) "Siding" means a short section of track, distinct from a mainline, branch line, or spur, connected by switches to a main track and used for storage, passing, or other purposes.
(8) Qualified expenditures, as defined in subsection (7)(d), (e), and (f) of this section, do not include expenditures used to generate a federal tax credit or expenditures funded by a state or federal grant.
(9) This section does not apply to class I railroads or short line railroads owned by a class I railroad or any of its subsidiaries.
(10) No person may claim a credit against taxes due under both this chapter and chapter 82.16 RCW for the same qualified expenditures.
p.
4 SSB 5494 (11) To claim a credit under this chapter, a person must electronically file with the department all returns, forms, and other information the department requires in an electronic format as provided or approved by the department.
Any return, form, or information required to be filed in an electronic format under this section is not filed until received by the department in an electronic format.
As used in this subsection, "returns" has the same meaning as "return" in RCW 82.32.050.
(12) No credit for qualifying expenditures under this section may be earned after January 1, 2036.
No credit may be claimed on tax returns filed for reporting periods beginning on or after January 1, 2042.
(1) Any company that recycles railroad material is eligible for a credit as provided in this section if, on or after the effective date of this section, the company transfers to an eligible taxpayer rail, ties, tie plates, joint bars, fasteners, switches, ballast, or other equipment or materials that are part of the rail infrastructure to be installed on tracks used by class II and class III railroads.
(1) A credit is allowed against taxes due under this chapter of expenditures made by an eligible taxpayer pursuant to subsection (2) of this section.
(2) The credit is equal to the fair market value of the donated materials used for track maintenance, expansion, or modernization.
(2) Qualified expenditures incurred by an eligible taxpayer may be used to generate a credit for the following amounts:
Materials must be given to a qualifying recipient without consideration to receive a credit.
(a) For qualified short line railroad maintenance expenditures, a credit is allowed against the taxes due under this chapter in an amount equal to 50 percent of the qualified short line railroad maintenance expenditures.
The department must provide in rule a standard for determining the fair market value of donated materials under this section.
The amount of the credit may not exceed an amount equal to $5,000 multiplied by the number of miles of railroad track owned or leased in the state by the eligible taxpayer as of the close of the taxable year.
(3)(a) A company that recycles railroad material may transfer all or a portion of the credit earned under this section to any taxpayer subject to the tax imposed under this chapter at any time during the year in which the credit is earned and five years following the year that the credit is earned.
(b) For qualified new rail development expenditures, a credit is allowed against the taxes due under this chapter in an amount equal to 100 percent of the new rail development expenditures of an eligible taxpayer.
(b) To transfer all or any portion of a credit earned, the taxpayer originally allowed the credit and the subsequent transferee must jointly file a credit transfer application with the department.
The amount of the credit for new rail development expenditures may not exceed $2,000,000 for each new rail development project of an eligible taxpayer.
The application must include:
(c) For qualified railroad modernization and rehabilitation expenditures, a credit is allowed against the taxes due under this chapter in an amount equal to 100 percent of the qualified railroad modernization and rehabilitation expenditures by an eligible taxpayer.
(i) The names, addresses, and taxpayer identification numbers of the parties to the transfer;
(ii) The amount of the credit being transferred;
5 SSB 5494 (iii) The year the credit was originally earned by the transferring taxpayer;
2 SB 5494 (3) The credit claimed may not exceed the tax that would otherwise be due under this chapter.
(iv) The tax year or years for which the credit may be claimed;
and (v) Any other information or documents the department may require.
(c) No credit or portion thereof may be transferred more than once.
(d) No credit transfer applications under (b) of this subsection (3) may be submitted for qualifying materials donated after December 31, 2036.
(4) The department must administer the credit.
(5) The credit claimed may not exceed the tax that would otherwise be due under this chapter.
Any amount of credit earned under this section not claimed by the person in one calendar year may be carried forward for no more than five calendar years immediately following the year that the credit was earned.
Expenditures not used to earn a credit in one fiscal year may be carried forward for no more than five years immediately following the year that the credit was allowed.
(6) For purposes of this section, the following definitions apply:
(4) An eligible taxpayer may assign distribution of all or a portion of the allowed credit or an unused portion of the credit by written agreement to any taxpayer subject to the tax imposed under this section at any time during the year in which the credit is earned and the years following the year of the qualified expenditures.
(a) "Class I railroad" means a railroad that is classified by the United States surface transportation board as a class I railroad, as defined in 49 C.F.R.
The taxpayer originally allowed the credit and the subsequent transferee shall jointly file a copy of the written credit transfer agreement with the department.
Sec.
The agreement shall include the names, addresses, and taxpayer identification numbers of the parties to the transfer, the amount of the credit being transferred, the year the credit was originally allowed to the transferring taxpayer, and the tax year or years for which the credit may be claimed.
1201.1-1(a), as in effect on January 1, 2024.
(5) The department shall administer the credit.
(b) "Eligible taxpayer" means:
The department shall provide a simple credit application form that the department shall post on its website.
(6) No new credits may be issued after June 30, 2034, except credits that are being carried forward from prior years may be applied in accordance with subsection (3) of this section.
(7) For the purposes of this section, the following definitions apply:
(a) "Eligible taxpayer" means:
1201.1-1(a), as in effect on January 1, 2024;
1201.1-1(a), as in effect January 1, 2023;
or (iii) Any owner or lessee of rail siding, industrial spur, or industry track, if the rail siding, industrial spur, or industry track is located on or adjacent to a class II or class III railroad in the state of Washington.
or (iii) Any owner or lessee of rail siding, industrial spur, or industry track located on or adjacent to a class II or class III railroad in the state of Washington.
(c) "Industrial spur" means a secondary track used by railroads and customers at a location to load and unload railcars without interfering with other railroad operations.
(b) "Qualified new rail development expenditures" means expenditures for new rail development by an eligible taxpayer, which includes the construction of new track, industrial leads, switches, spurs, sidings, rail loading docks, and transloading structures p.
p.
3 SB 5494 involved with providing rail services to new customer locations or existing customer expansions in the state by an eligible taxpayer.
6 SSB 5494 (d) "Siding" means a short section of track, distinct from a mainline, branch line, or spur, connected by switches to a main track and used for storage, passing, or other purposes.
(c) "Qualified railroad modernization and rehabilitation expenditures" means expenditures by an eligible taxpayer to upgrade less than 90 pound rail and switches, 286,000 capacity rail upgrades to the mainline track, major rail and tie replacement projects, track capacity enhancements, bridge rehabilitation or bridge replacement projects, or other track-related projects determined to enhance or modernize the existing track infrastructure in the state by an eligible taxpayer.
(7) Credit under this section may not be earned for donations to short line railroads owned by a class I railroad or any of its subsidiaries.
(d) "Qualified short line railroad maintenance expenditures" means expenditures for railroad infrastructure including, but not limited to, rail, ties, tie plates, joint bars, fasteners, switches, ballast, subgrade, roadbed, bridges, industrial leads, sidings, signs, safety barriers, crossing signals and gates, and related track structures owned or leased by a class II or class III railroad.
(8) No person may claim a credit against taxes due under both this chapter and chapter 82.16 RCW for the same donated materials.
(8) This section expires June 30, 2039.
(9) To claim a credit under this chapter, a person must electronically file with the department all returns, forms, and other information the department requires in an electronic format as provided or approved by the department.
Any return, form, or information required to be filed in an electronic format under this section is not filed until received by the department in an electronic format.
As used in this subsection, "returns" has the same meaning as "return" in RCW 82.32.050.
(10) No credit under this section may be earned after January 1, 2037.
No credit may be claimed on tax returns filed for reporting periods beginning on or after January 1, 2042.
A new section is added to chapter 82.04 RCW to read as follows:
(1) Any owner or operator of a class I railroad, or owner of a company that recycles railroad material, is eligible for an exemption from the tax under this chapter in the form of a credit as provided in this section if:
(a) The class I railroad transfers to an eligible taxpayer railroad rail, ties, tie plates, joint bars, fasteners, switches, ballast, or other equipment or materials that are part of the rail infrastructure it has removed from use on the main railroad line to be installed on tracks used by class II and class III railroads;
or (b) The owner of a company that recycles railroad materials transfers to an eligible taxpayer rail, ties, fasteners, switches, ballast, or other equipment or materials that are part of the rail infrastructure to be installed on tracks used by class II and class III railroads.
(2) The credit is equal to the fair market value of the donated materials used for track maintenance, expansion, or modernization.
(3) An owner or operator of a class I railroad, or owner of a company that recycles railroad material, may assign distribution of all or a portion of the allowed credit or an unused portion of the credit by written agreement to any taxpayer subject to the tax p.
4 SB 5494 imposed under this section at any time during the year in which the credit is earned and the years following the year of the qualified expenditures.
The taxpayer originally allowed the credit and the subsequent transferee shall jointly file a copy of the written credit transfer agreement with the department.
The agreement shall include the names, addresses, and taxpayer identification numbers of the parties to the transfer, the amount of the credit being transferred, the year the credit was originally allowed to the transferring taxpayer, and the tax year or years for which the credit may be claimed.
(4) The department shall administer the credit.
The department shall provide a simple credit application form that the department shall post on its website.
(5) No new credits may be issued after June 30, 2034, except credits that are being carried forward from prior years may be applied in accordance with subsection (2) of this section.
(6) For purposes of this section, "eligible taxpayer" means:
(a) Any railroad subject to the tax under this chapter that is classified by the United States surface transportation board as a class II or class III railroad, as defined in 49 C.F.R.
Sec.
1201.1-1(a), as in effect January 1, 2023;
(b) Any railroad owned by a port, city, or county in the state of Washington;
or (c) Any owner or lessee of rail siding, industrial spur, or industry track located on or adjacent to a class II or class III railroad in the state of Washington.
(7) This section expires June 30, 2039.
NEW SECTION.
Sec.
5.
(a) Owners and operators of class II or class III railroads;
(a) Owners and operators of class II or class III railroad operators;
(b) Any railroad or freight rail facility owned by a port, city, or county in the state of Washington;
(b) Any railroad owned by a port, city, or county in the state of Washington;
or (c) Any owner or lessee of a rail siding, industrial spur, or industry track, if the rail siding, industrial spur, or industry track is located on or adjacent to a class II or class III railroad in the state of Washington.
or (c) Any owner or lessee of a rail siding, industrial spur, or industry track located on or adjacent to a class II or class III railroad in the state of Washington.
(2) Sellers making tax-exempt sales under this section must obtain an exemption certificate from the buyer in a form and manner prescribed by the department.
The seller must retain a copy of the exemption certificate for the seller's files.
Instead of an exemption certificate, a seller may capture the relevant data elements as allowed under the streamlined sales and use tax agreement.
(3) For the purposes of this section, the following definitions apply:
7 SSB 5494 (a) "Class I railroad" means a railroad that is classified by the United States surface transportation board as a class I railroad, as defined in 49 C.F.R.
5 SB 5494 (2) For the purposes of this section, the following definitions apply.
(a) "Class II or class III railroad" means railroads that are classified by the United States surface transportation board as a class II or class III railroad, as defined in 49 C.F.R.
1201.1-1(a), as in effect on January 1, 2024.
1201.1-1(a), as in effect January 1, 2023.
(b) "Class II or class III railroad" means railroads that are classified by the United States surface transportation board as a class II or class III railroad, as defined in 49 C.F.R.
(b) "Materials required for track maintenance" means rail, ties, tie plates, joint bars, fasteners, switches, ballast, subgrade, roadbed, bridges, industrial leads, sidings, signs, safety barriers, crossing signals and gates, and track.
Sec.
(3) This section expires June 30, 2034.
1201.1-1(a), as in effect on January 1, 2024.
(c) "Freight rail facilities" means the infrastructure used to transport freight by rail, specifically to rail yards, terminals, sidings, and marshalling yards that play an important role in the transportation and distribution and shipping of goods over long distances.
(d) "Industrial spur" means a secondary track used by railroads and customers at a location to load and unload railcars without interfering with other railroad operations.
(e) "Materials required for track maintenance" means the following items when used for purposes of track maintenance:
Rail, ties, tie plates, joint bars, fasteners, switches, ballast, subgrade, roadbed, bridges, industrial leads, sidings, signs, safety barriers, crossing signals and gates, and track.
(f) "Siding" means a short section of track, distinct from a mainline, branch line, or spur, connected by switches to a main track and used for storage, passing, or other purposes.
(4) This section does not apply to class I railroads or short line railroads owned by a class I railroad or any of its subsidiaries.
(5) This section expires January 1, 2036.
5.
6.
(1) The provisions of this chapter do not apply to the use of materials required for track maintenance by:
(1) The provisions of this chapter do not apply with respect to materials required for track maintenance to:
(a) Owners and operators of class II or class III railroads;
(a) Owners and operators of class II or class III railroad operators;
(b) Any railroad or freight rail facility owned by a port, city, or county in the state of Washington;
(b) Any railroad owned by a port, city, or county in the state of Washington;
or (c) Any owner or lessee of a rail siding, industrial spur, or industry track, if the rail siding, industrial spur, or industry track is located on or adjacent to a class II or class III railroad in the state of Washington.
or (c) Any owner or lessee of a rail siding, industrial spur, or industry track located on or adjacent to a class II or class III railroad in the state of Washington.
p.
(2) For purposes of this section, the following definitions apply.
8 SSB 5494 (2) For purposes of this section, the following definitions apply:
(a) "Class II or class III railroad" means railroads that are classified by the United States surface transportation board as a class II or class III railroad, as defined in 49 C.F.R.
(a) "Class I railroad" means a railroad that is classified by the United States surface transportation board as a class I railroad, as defined in 49 C.F.R.
1201.1-1(a), as in effect on January 1, 2024.
1201.1-1(a), as in effect January 1, 2023.
(b) "Class II or class III railroad" means railroads that are classified by the United States surface transportation board as a class II or class III railroad, as defined in 49 C.F.R.
(b) "Materials required for track maintenance" has the same meaning as in section 5 of this act.
Sec.
(3) This section expires June 30, 2034.
1201.1-1(a), as in effect on January 1, 2024.
(c) "Freight rail facilities" means the infrastructure used to transport freight by rail, specifically to rail yards, terminals, sidings, and marshalling yards that play an important role in the transportation and distribution and shipping of goods over long distances.
(d) "Industrial spur" means a secondary track used by railroads and customers at a location to load and unload railcars without interfering with other railroad operations.
(e) "Materials required for track maintenance" has the same meaning as in section 4 of this act.
(f) "Siding" means a short section of track, distinct from a mainline, branch line, or spur, connected by switches to a main track and used for storage, passing, or other purposes.
(3) This section does not apply to class I railroads or short line railroads owned by a class I railroad or any of its subsidiaries.
(4) This section expires January 1, 2036.
6.
7.
(1) A credit is allowed against taxes due under this chapter for expenditures made by an eligible taxpayer pursuant to subsection (2) of this section.
(1) A credit is allowed against taxes due under this chapter of expenditures made by an eligible taxpayer pursuant to subsection (2) of this section.
The credit is subject to a maximum annual credit amount set forth in subsection (3) of this section.
(a) For qualified short line railroad maintenance expenditures, a credit is allowed against the taxes due under this chapter in an amount equal to 50 percent of the qualified short line railroad maintenance expenditures.
p.
The amount of the credit earned in a p.
6 SB 5494 (a) For qualified short line railroad maintenance expenditures, a credit is allowed against the taxes due under this chapter in an amount equal to 50 percent of the qualified short line railroad maintenance expenditures.
9 SSB 5494 calendar year may not exceed an amount equal to $3,500 multiplied by the number of miles of railroad track owned or leased in the state by the eligible taxpayer as of the close of the calendar year.
The amount of the credit may not exceed an amount equal to $5,000 multiplied by the number of miles of railroad track owned or leased in the state by the eligible taxpayer as of the close of the taxable year.
(b) For qualified new rail development expenditures, a credit is allowed against the taxes due under this chapter in an amount equal to 50 percent of the new rail development expenditures of an eligible taxpayer.
(b) For qualified new rail development expenditures, a credit is allowed against the taxes due under this chapter in an amount equal to 100 percent of the new rail development expenditures of an eligible taxpayer.
(c) For qualified railroad modernization and rehabilitation expenditures, a credit is allowed against the taxes due under this chapter in an amount equal to 50 percent of the qualified railroad modernization and rehabilitation expenditures by an eligible taxpayer.
The amount of the credit for new rail development expenditures may not exceed $2,000,000 for each new rail development project of an eligible taxpayer.
(3) The total credit amount approved under subsection (2) of this section and section 2(2) of this act may not exceed $1,000,000 for each eligible taxpayer in a calendar year.
(c) For qualified railroad modernization and rehabilitation expenditures, a credit is allowed against the taxes due under this chapter in an amount equal to 100 percent of the qualified railroad modernization and rehabilitation expenditures by an eligible taxpayer.
Credits are available on a first-in-time basis.
(3) The credit claimed may not exceed the tax that would otherwise be due under this chapter.
The department must disallow any credits, or portions thereof, that would cause the total amount of credits approved under subsection (2) of this section and section 2(2) of this act to exceed $15,000,000 during any calendar year.
(4) The credit claimed may not exceed the tax that would otherwise be due under this chapter.
Any amount of credit earned under this section not claimed by the person in one calendar year may be carried forward for no more than five calendar years immediately following the year that the credit was earned.
Expenditures not used to earn a credit in one fiscal year may be carried forward for no more than five years immediately following the year that the credit was allowed.
(5)(a) An eligible taxpayer may transfer all or a portion of the credit approved under this section to any taxpayer subject to the tax imposed under this chapter at any time during the calendar year in which the credit is approved by the department and five years following the year that the credit is approved.
(4) An eligible taxpayer may assign distribution of all or a portion of the allowed credit or an unused portion of the credit by written agreement to any taxpayer subject to the tax imposed under this section at any time during the year in which the credit is earned and the years following the year of the qualified expenditures.
(b) To transfer all or any portion of an approved credit, the taxpayer originally allowed the credit and the subsequent transferee must jointly file a credit transfer application with the department.
The taxpayer originally allowed the credit and the subsequent transferee shall jointly file a copy of the written credit transfer agreement with the department.
The application must include:
The agreement shall include the names, addresses, and taxpayer identification numbers of the parties to the transfer, the amount of the credit being transferred, the year the credit was originally allowed to the transferring taxpayer, and the tax year or years for which the credit may be claimed.
(i) The names, addresses, and taxpayer identification numbers of the parties to the transfer;
(5) The department shall administer the credit.
(ii) The amount of the credit being transferred;
The department shall provide a simple credit application form that the department shall post on its website.
(iii) The year the credit was originally approved by the department for use by the transferring taxpayer;
10 SSB 5494 (iv) The tax year or years for which the credit may be claimed;
7 SB 5494 (6) No new credits may be issued after June 30, 2034, except credits that are being carried forward from prior years may be applied in accordance with subsection (3) of this section.
and (v) Any other information or documents the department may require.
(c) No credit or portion thereof may be transferred more than once.
(6) The department must administer the credit.
To claim or transfer a credit under this section, the person applying must complete an application for credit based on qualified expenditures incurred by the eligible taxpayer the previous calendar year.
The department must rule on applications within 60 days of receipt except that the department may extend the time of processing such application upon notice to the taxpayer and explanation of why ruling on the application cannot be completed within such time.
(a) "Class I railroad" means a railroad that is classified by the United States surface transportation board as a class I railroad, as defined in 49 C.F.R.
(a) "Eligible taxpayer" means:
Sec.
1201.1-1(a), as in effect on January 1, 2024.
(b) "Eligible taxpayer" means:
1201.1-1(a), as in effect on January 1, 2024;
1201.1-1(a), as in effect January 1, 2023;
or (iii) Any owner or lessee of rail siding, industrial spur, or industry track, if the rail siding, industrial spur, or industry track is located on or adjacent to a class II or class III railroad in the state of Washington.
or (iii) Any owner or lessee of rail siding, industrial spur, or industry track located on or adjacent to a class II or class III railroad in the state of Washington.
(c) "Industrial spur" means a secondary track used by railroads and customers at a location to load and unload railcars without interfering with other railroad operations.
(b) "Qualified new rail development expenditures" means expenditures for new rail development by an eligible taxpayer, which includes the construction of new track, industrial leads, switches, spurs, sidings, rail loading docks, and transloading structures involved with providing rail services to new customer locations or existing customer expansions in the state by an eligible taxpayer.
(d) "Qualified new rail development expenditures" means expenditures for new rail development by an eligible taxpayer, which includes the construction of new track, industrial leads, switches, industrial spurs, sidings, rail loading docks, and transloading structures involved with providing rail services to new customer p.
(c) "Qualified railroad modernization and rehabilitation expenditures" means expenditures by an eligible taxpayer to upgrade less than 90 pound rail and switches, 286,000 capacity rail upgrades to the mainline track, major rail and tie replacement projects, track capacity enhancements, bridge rehabilitation or bridge replacement projects, or other track-related projects determined to enhance or modernize the existing track infrastructure in the state by an eligible taxpayer.
11 SSB 5494 locations or existing customer expansions in the state by an eligible taxpayer.
(d) "Qualified short line railroad maintenance expenditures" means expenditures for railroad infrastructure including, but not limited to, rail, ties, tie plates, joint bars, fasteners, switches, ballast, subgrade, roadbed, bridges, industrial leads, sidings, signs, safety barriers, crossing signals and gates, and related track structures owned or leased by a class II or class III railroad.
(e) "Qualified railroad modernization and rehabilitation expenditures" means expenditures by an eligible taxpayer to upgrade less than 90 pound rail and switches, 286,000 pound capacity rail upgrades to the mainline track, rail and tie replacement projects, track capacity enhancements, bridge rehabilitation or bridge replacement projects, natural disaster projects, or other track- related projects determined to enhance or modernize the existing track infrastructure in the state by an eligible taxpayer.
(8) This section expires June 30, 2039.
(f) "Qualified short line railroad maintenance expenditures" means expenditures for railroad infrastructure maintenance including, but not limited to, rail, ties, tie plates, joint bars, fasteners, switches, ballast, subgrade, roadbed, bridges, industrial leads, sidings, signs, safety barriers, crossing signals and gates, and related track structures owned or leased by a class II or class III railroad.
(g) "Siding" means a short section of track, distinct from a mainline, branch line, or spur, connected by switches to a main track and used for storage, passing, or other purposes.
(8) Qualified expenditures, as defined in subsection (7)(d), (e), and (f) of this section, do not include expenditures used to generate a federal tax credit or expenditures funded by a state or federal grant.
(9) This section does not apply to class I railroads or short line railroads owned by a class I railroad or any of its subsidiaries.
(10) No person may claim a credit against taxes due under both this chapter and chapter 82.04 RCW for the same qualified expenditures.
(11) To claim a credit under this chapter, a person must electronically file with the department all returns, forms, and other information the department requires in an electronic format as provided or approved by the department.
Any return, form, or information required to be filed in an electronic format under this section is not filed until received by the department in an electronic format.
As used in this subsection, "returns" has the same meaning as "return" in RCW 82.32.050.
p.
12 SSB 5494 (12) No credit under this section may be earned after January 1, 2036.
No credit may be claimed on tax returns filed for reporting periods beginning on or after January 1, 2042.
7.
8.
(1) Any company that recycles railroad material is eligible for a credit as provided in this section if, on or after the effective date of this section, the company transfers to an eligible taxpayer rail, ties, tie plates, joint bars, fasteners, switches, ballast, or other equipment or materials that are part of the rail infrastructure to be installed on tracks used by class II and class III railroads.
(2) The credit is equal to the fair market value of the donated materials used for track maintenance, expansion, or modernization.
Materials must be given to a qualifying recipient without consideration to receive a credit.
The department must provide in rule a standard for determining the fair market value of donated materials under this section.
(3)(a) A company that recycles railroad material may transfer all or a portion of the credit earned under this section to any taxpayer subject to the tax imposed under this chapter at any time during the year in which the credit is earned and five years following the year that the credit is earned.
(b) To transfer all or any portion of a credit earned, the taxpayer originally allowed the credit and the subsequent transferee must jointly file a credit transfer application with the department.
The application must include:
(i) The names, addresses, and taxpayer identification numbers of the parties to the transfer;
(ii) The amount of the credit being transferred;
(iii) The year the credit was originally earned by the transferring taxpayer;
(iv) The tax year or years for which the credit may be claimed;
and (v) Any other information or documents the department may require.
(c) No credit or portion thereof may be transferred more than once.
13 SSB 5494 (d) No credit transfer applications under (b) of this subsection (3) may be submitted for qualifying materials donated after December 31, 2036.
8 SB 5494 (1) Any owner or operator of a class I railroad, or owner of a company that recycles railroad material, is eligible for an exemption from the tax under this chapter in the form of a credit as provided in this section if:
(4) The department must administer the credit.
(a) The class I railroad transfers to an eligible taxpayer railroad rail, ties, tie plates, joint bars, fasteners, switches, ballast, or other equipment or materials that are part of the rail infrastructure it has removed from use on the main railroad line to be installed on tracks used by class II and class III railroads;
(5) The credit claimed may not exceed the tax that would otherwise be due under this chapter.
or (b) The owner of a company that recycles railroad materials transfers to an eligible taxpayer rail, ties, tie plates, joint bars, fasteners, switches, ballast, or other equipment or materials that are part of the rail infrastructure to be installed on tracks used by class II and class III railroads.
Refunds may not be granted in the place of credits.
(2) The credit is equal to the fair market value of the donated materials used for track maintenance, expansion, or modernization.
Any amount of credit earned under this section not claimed by the person in one calendar year may be carried forward for no more than five calendar years immediately following the year that the credit was earned.
(3) An owner or operator of a class I railroad, or owner of a company that recycles railroad material, may assign distribution of all or a portion of the allowed credit or an unused portion of the credit by written agreement to any taxpayer subject to the tax imposed under this section at any time during the year in which the credit is earned and the years following the year of the qualified expenditures.
(6) For purposes of this section, the following definitions apply:
The taxpayer originally allowed the credit and the subsequent transferee shall jointly file a copy of the written credit transfer agreement with the department.
(a) "Class I railroad" means a railroad that is classified by the United States surface transportation board as a class I railroad, as defined in 49 C.F.R.
The agreement shall include the names, addresses, and taxpayer identification numbers of the parties to the transfer, the amount of the credit being transferred, the year the credit was originally allowed to the transferring taxpayer, and the tax year or years for which the credit may be claimed.
(4) The department shall administer the credit.
The department shall provide a simple credit application form that the department shall post on its website.
(5) No new credits may be issued after June 30, 2034, except credits that are being carried forward from prior years may be applied in accordance with subsection (2) of this section.
(6) For purposes of this section, "eligible taxpayer" means:
(a) Any railroad subject to the tax under this chapter that is classified by the United States surface transportation board as a p.
9 SB 5494 class II or class III railroad, as defined in 49 C.F.R.
1201.1-1(a), as in effect on January 1, 2024.
1201.1-1(a), as in effect January 1, 2023;
(b) "Eligible taxpayer" means:
(b) Any railroad owned by a port, city, or county in the state of Washington;
(i) Any railroad subject to the tax under this chapter that is classified by the United States surface transportation board as a class II or class III railroad, as defined in 49 C.F.R.
or (c) Any owner or lessee of rail siding, industrial spur, or industry track located on or adjacent to a class II or class III railroad in the state of Washington.
Sec.
(7) This section expires June 30, 2039.
1201.1-1(a), as in effect on January 1, 2024;
(ii) Any railroad owned by a port, city, or county in the state of Washington;
or (iii) Any owner or lessee of rail siding, industrial spur, or industry track, if the rail siding, industrial spur, or industry track is located on or adjacent to a class II or class III railroad in the state of Washington.
(c) "Industrial spur" means a secondary track used by railroads and customers at a location to load and unload railcars without interfering with other railroad operations.
(d) "Siding" means a short section of track, distinct from a mainline, branch line, or spur, connected by switches to a main track and used for storage, passing, or other purposes.
(7) Credit under this section may not be earned for donations to short line railroads owned by a class I railroad or any of its subsidiaries.
(8) No person may claim a credit against taxes due under both this chapter and chapter 82.04 RCW for the same donated materials.
(9) To claim a credit under this chapter, a person must electronically file with the department all returns, forms, and other p.
14 SSB 5494 information the department requires in an electronic format as provided or approved by the department.
Any return, form, or information required to be filed in an electronic format under this section is not filed until received by the department in an electronic format.
As used in this subsection, "returns" has the same meaning as "return" in RCW 82.32.050.
(10) No credit under this section may be earned after January 1, 2037.
No credit may be claimed on tax returns filed for reporting periods beginning on or after January 1, 2042.
8.
9.
., Laws of 2024 (this act).
., Laws of 2023 (this act).
(2) The legislature categorizes the tax preferences in this act as ones intended to accomplish a general purpose, as indicated in RCW 82.32.808(2)(f).
(2) The legislature categorizes the tax preferences in this act as ones intended to accomplish a general purpose, as indicated in RCW 82.32.808(2)(f), which is to promote economic development throughout Washington.
(3) It is the legislature's specific public policy objective to promote economic development and reduce impacts of freight transportation on roads and the environment.
(3) It is the legislature's specific public policy objective to encourage and expand economic development by incentivizing investment in Washington's railroad infrastructure.
(4) In conducting a review under this section, the joint legislative audit and review committee should consider, among other measures:
(4) The legislature intends to extend the expiration date of the tax preferences in this act if a review finds that freight rail system in the state has been maintained or improved.
(a) The total miles capable of transporting 286,000 pound railcars;
In conducting its review under this section, the joint legislative audit and review committee should consider, among other measures:
(b) The number of miles of track rehabilitated to 90 pound rail or greater;
(a) The total miles capable of transporting 286,000-pound railcars;
(b) The number of miles of track rehabilitated to 90-pound rail or greater;
(i) Any improvement in federal railroad administration track classification designation up to and including class II track and the ability to operate at greater speeds;
15 SSB 5494 (j) The amount of steel or ties made obsolete pursuant to section 2 of this act that are reused by a class II or class III railroad, as defined in section 5 of this act, within Washington;
10 SB 5494 (i) Any improvement in federal railroad administration track classification designation up to and including class II track and the ability to operate at greater speeds;
(k) The number of prevailing wage jobs associated with new rail development, modernization, and rehabilitation projects by taxpayers using the tax preferences under this act;
and (j) The amount of steel or ties deemed obsolete by a class I railroad, as defined in section 2 of this act, that are reused by a class II or class III railroad, as defined in section 5 of this act, within Washington.
and (l) The number of additional rail cars utilizing class I railroads as a result of new development, modernization, and rehabilitation projects by taxpayers using the tax preferences under this act.
(5) In order to obtain the data necessary to perform a review in subsection (4) of this section, the joint legislative audit and review committee may refer to any data collected by the state.
(5) In order to obtain the data necessary to perform the review in subsection (4) of this section, the joint legislative audit and review committee may refer to any data collected by the state.
9.
Sections 4, 5, and 8 of this act take effect July 1, 2024.
NEW SECTION.
Sec.
Sections 3 and 7 of this act take effect July 1, 2025.
This act takes effect January 1, 2024.
NEW SECTION.
Sec.
11.
Sections 2 and 6 of this act take effect January 1, 2025.
16 SSB 5494
11 SB 5494
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Action History

  1. Public hearing in the Senate Committee on Ways & Means at 4:00 PM.

  2. Referred to Ways & Means.

  3. Minority; without recommendation.

  4. And refer to Ways & Means.

  5. BFGT - Majority; 1st substitute bill be substituted, do pass.

  6. Executive action taken in the Senate Committee on Business, Financial Services, Gaming & Trade at 8:00 AM.

  7. Public hearing in the Senate Committee on Business, Financial Services, Gaming & Trade at 10:30 AM.

  8. By resolution, reintroduced and retained in present status.

  9. Executive session scheduled, but no action was taken in the Senate Committee on Business, Financial Services, Gaming & Trade at 10:30 AM.

  10. Public hearing in the Senate Committee on Business, Financial Services, Gaming & Trade at 10:30 AM.

  11. First reading, referred to Business, Financial Services, Gaming & Trade.

Sponsors

Sponsorship breakdown

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1 sponsors · 9 co-sponsors · 141 not signed on

Sponsors (1)

Co-sponsors (9)

Not signed on (141)

141 members have not signed on to this bill.

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"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.

Whip count is in markup. Polling the chamber and every recorded vote this session. Only the first open is slow. It’s instant for you after this. Calling the roll · Tallying · Engrossing

Subjects

transportation
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Frequently asked questions

Who sponsors SB 5494?
SB 5494 is sponsored by Jeff Holy (Republican), Judy Warnick (Republican), Mark Schoesler (Republican), Marko Liias (Democrat), Perry Dozier (Republican), John Lovick (Democrat), Curtis King (Republican), Kuderer, Jeff Wilson (Republican), and Wilson, L..
What is the current status of SB 5494?
This bill died with 2023-2024 Regular Session. It reached “Passed Senate” and never advanced before the session ended, so it can no longer move — a new version would have to be reintroduced in the current session.
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