Short Line Railroad Tax Credit
Income Taxpayers - Effective for tax years 2022 through 2031.
A tax credit shall be allowed for any eligible taxpayer that has invested in qualified railroad track maintenance, to the extent the expenditures are on track located in Kansas, and the track was owned or leased by an eligible taxpayer as of January 1, 2022.
To apply for the credit, an eligible taxpayer must complete and submit Form K-205, Short Line Railroad Tax Credit Application, which is available here. All qualified railroad track maintenance expenditures must be approved before the credit will be issued and allowed to be applied against an eligible taxpayer’s income tax liability.
The amount of credit is limited to $5,000 per mile of track or per rail siding owned or leased within the state of Kansas by the eligible taxpayer as of the close of the taxable year. A mile of track may be taken into account only once in each taxable year.
Any credit not used by an eligible taxpayer in the year it is allowed can be carried forward for up to five taxable years immediately following the taxable year for which the credit was allowed.
A credit not used by an eligible taxpayer may be transferred, by written agreement, from an eligible taxpayer to an eligible customer or eligible vendor. A transfer from an eligible taxpayer to an eligible customer or eligible vendor must occur during the five years immediately following the taxable year for which the credit is allowed. A copy of the written transfer agreement must be jointly filed with the Department of Revenue by the eligible taxpayer originally allowed the credit and the transferee within 30 days of the transfer. The written agreement must contain the name, address and taxpayer identification number of the parties to the transfer, the amount of unused credit being transferred, the taxable year the credit was originally allowed to the eligible taxpayer and the taxable year or years for which the credit may be claimed. Form K-260, Tax Credit Transfer Notification must be completed and provided when submitting the written agreement to the Kansas Department of Revenue. Form K-260 can be found here.
Limitation of Credit
The total amount of credits allowed for all eligible taxpayers for each taxable year shall not exceed $8,720,000. Qualified railroad track maintenance expenditures do not include expenditures used to generate a federal tax credit or expenditures funded by a state or federal grant.
Procedures to Claim the Credit
You may download Schedule K-29 to claim the Short Line Railroad tax credit. This schedule must be completed and submitted with the income tax return. You may also call the Department of Revenue voice mail system at 785-296-4937 to request Schedule K-29. You will be asked to give your name, address, phone number and Sform(s) you desire. Please allow two weeks for delivery of your forms.
An eligible customer means a business that:
- Uses class II or class III short line railroads or railroad-related property, facilities or structures located wholly or partly within the state of Kansas to directly or indirectly transport property, commodities or goods;
- Is served by a class II or class III short line railroad; or
- Stores railcars on the class II or class III short line railroad. An eligible customer does not include a class I railroad, as defined in 49 C.F.R. § 1201.1-1(a), as in effect on January 1, 2022.