The proposed bill aims to enhance freight railroad infrastructure in Washington by introducing tax incentives for eligible taxpayers in the railroad industry. It establishes new tax credits for qualified expenditures related to short line railroad maintenance, new rail development, and modernization efforts, allowing taxpayers to claim a credit equal to 50% of their expenditures, capped at $500,000 per taxpayer annually, with an overall limit of $8 million for all credits in a calendar year. The bill also permits the transfer of these credits among taxpayers and outlines specific eligibility criteria while excluding class I railroads and short line railroads owned by class I railroads.

Additionally, the bill introduces tax exemptions for the sale and use of materials necessary for track maintenance by class II and class III railroads, as well as rail facilities owned by local governments. It also establishes tax credits for companies that recycle railroad materials, allowing them to claim credits based on the fair market value of donated materials used for track maintenance or modernization. The legislation includes a performance statement to assess the effectiveness of these tax preferences, with provisions set to expire between 2037 and 2038. The act will be implemented in phases, with certain sections becoming effective in 2025 and 2026, contingent upon funding being secured by June 30, 2025.