This bill aims to enhance freight railroad infrastructure in Washington by providing tax incentives to eligible taxpayers involved in railroad operations. It establishes new tax credits for qualified expenditures related to short line railroad maintenance, new rail development, and modernization efforts. Eligible taxpayers can receive a credit equal to 50% of their qualified expenditures, with a maximum annual credit limit of $500,000 per taxpayer and an overall cap of $8 million for all credits in a calendar year. The bill also allows for the transfer of these credits among taxpayers and sets specific definitions and eligibility criteria for class II and class III railroads. Additionally, it introduces tax exemptions for the sale and use of materials required for track maintenance by certain railroad operators and facilities.

Furthermore, the bill establishes a new credit for companies that recycle railroad materials, allowing them to claim a credit equal to the fair market value of donated materials used for track maintenance, expansion, or modernization. This credit can also be transferred under similar conditions as the modernization credit. The bill includes provisions for the administration of these credits, expiration dates for claiming them, and a performance statement to evaluate the effectiveness of the tax preferences. If specific funding for the act is not provided by June 30, 2025, the act will be null and void, with effective dates for various sections staggered between 2025 and 2026.