Senate BillIntroducedRevenue and Taxation
SB 1287: Personal Income Tax Law: Corporation Tax Law: credits: shortline railroad expenditures and railroad infrastructure.
What SB 1287 does, verified June 1, 2026
This bill allows for credits against the personal income tax and corporation tax for qualified shortline railroad expenditures and new rail infrastructure expenditures. These credits can be claimed for each taxable year starting on January 1, 2026, and are equal to 50% of the qualified expenditures. The bill requires additional information to be included in any new tax expenditure bill, and it takes effect immediately as a tax levy. This law aims to promote the modernization of shortline railroads and their infrastructure in California.
Bill journey
1IntroducedCurrent
2In CommitteePending
3First Chamber FloorPending
4Second ChamberPending
5GovernorPending
6ChapteredPending
Last action: May 14 hearing: Held in committee and under submission. (2026-05-14)Alert me
Author and sponsors
Full contact details, staff, and committees with Connect, $16/moUnlockRecent actions13 total · showing 5
| May. 14, 2026 | May 14 hearing: Held in committee and under submission. |
| May. 08, 2026 | Set for hearing May 14. |
| May. 04, 2026 | May 4 hearing: Placed on APPR. suspense file. |
| Apr. 24, 2026 | Set for hearing May 4. |
| Apr. 22, 2026 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 12. Noes 0. Page 3985.) (April 21). Re-referred to Com. on APPR. |
Latest bill textAmended version, April 9, 2026 · 1,881 words
| Amended IN Senate April 09, 2026 |
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
Senate Bill
No. 1287
| Introduced by Senator Hurtado |
February 20, 2026 |
An act to add and repeal Sections 17053.31, 17053.32, 23631, and 23632 to of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
SB 1287, as amended, Hurtado. Personal Income Tax Law: Corporation Tax Law: credits: shortline railroad expenditures and railroad infrastructure.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.
This bill, the Shortline Railroad Modernization Act of 2026, would allow credits against those taxes for each taxable year beginning on or after January 1, 2026, 2027, and before January 1, 2032, to a qualified taxpayer in an amount equal to 50% of the qualified shortline railroad expenditures and for each taxable year beginning on or after January 1, 2028, and before January 1, 2033, in an amount equal to 50% of the qualified new rail infrastructure expenditures, as defined and specified.
Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill would include additional information required for any bill authorizing a new tax expenditure.
This bill would take effect immediately as a tax levy.
The people of the State of California do enact as follows:
SECTION 1.
This act shall be known, and may be cited, as the “Shortline Railroad Modernization Act of 2026.”SEC. 2.
Section 17053.31 is added to the Revenue and Taxation Code, to read:17053.31.
(a) (1) For taxable years beginning on or after January 1,(2) The amount of the credit allowed by this section shall not exceed the product of five thousand dollars ($5,000) and the number of miles of railroad track owned or leased within the State of California by the qualified taxpayer at the close of the taxable year for which the credit is claimed.
(3) The credit shall be allowed for the taxable year in which the department issues the credit certificate pursuant to subdivision (d).
(4) The aggregate amount of credits that may be allocated in a fiscal year pursuant to this section and Section 23631 shall not exceed seven million dollars ($7,000,000).
(b) For purposes of this section:
(1) “Board” means the Franchise Tax Board.
(2) “Department” means the Department of Transportation.
(3) (A) “Qualified shortline railroad expenditures” means the nonreimbursed costs paid or incurred by the qualified taxpayer for railroad infrastructure maintenance and or capital improvements for of infrastructure or capital owned or leased by the qualified taxpayer to operate a Class II or Class III railroad, including, but not limited to, maintenance of or improvements to rail, tie plates, joint bars, fasteners, switches, ballast, subgrade, bridges, industrial leads, sidings, signs, safety barriers, crossing signal and gates, industrial spur, industry track, and related track structures.
(B) “Qualified shortline railroad expenditures” does not include any cost paid or incurred by the qualified taxpayer that is used as the basis for a federal tax credit or credit, that is funded by a federal grant. grant, or that was paid or incurred more than 12 months before the date the qualified taxpayer submitted their application for credit certification.
(4) “Qualified taxpayer” means either of the following:
(B)An owner or lessee of a rail siding, industrial spur, or industry track located on or adjacent to any railroad in California.
(c) (1)In the case where the credit allowed under this section exceeds the “net tax,” as defined in Section 17039, for a taxable year, the excess credit may be carried over to reduce the “net tax” in the following taxable year, and succeeding five taxable years, if necessary, until the credit has been exhausted.
(2)A credit allowed pursuant to this section for a qualified taxpayer that is a partnership, limited liability company, or an estate or trust shall be distributed to the partner, members, or beneficiaries in the same manner as income is distributed.
(3)A qualified taxpayer may assign all or part of the credit allowed pursuant to this section.
(A)The qualified taxpayer and the assignee shall report to the Franchise Tax Board, in the form and manner specified by the board, all required information regarding the assignment of the credit. The amount paid in consideration of the assignment shall not exceed the amount of the credit assigned.
(B)A credit shall not be assigned pursuant to this paragraph to more than one taxpayer, nor may the credit be reassigned by the assignee to another taxpayer.
(C)A party that has acquired a tax credit under this section shall be subject to the requirements of this section.
(D)A qualified taxpayer shall not assign a tax credit to the extent the tax credit allowed by this section is claimed on any tax return of the qualified taxpayer.
(E)In the event that the taxpayer originally allocated a credit under this section by the department and a taxpayer to whom the credit has been assigned both claim the same amount of credit on their tax returns, the board may disallow the credit of either taxpayer, so long as the statute of limitations upon assessment remains open.
(d) If the credit allowed by this section is claimed by a qualified taxpayer, any deduction or credit otherwise allowed under this part for any qualified expenditures made by the qualified taxpayer as a trade or business expense shall be reduced by the amount of the credit allowed by this section.
(e) Notwithstanding any other law, a qualified taxpayer may sell any credit allowed under this section to an unrelated party.
(d)
(f) (1) To be eligible for allocated a credit under this section, a qualified taxpayer shall apply to the department for a credit certification pursuant to this subdivision.
(2) The qualified taxpayer shall submit an application, in the form and manner prescribed by the department, upon completion of the project for which the for qualified shortline railroad expenditures were incurred. The application shall include both all of the following:
(A) The number of miles of railroad track owned or leased in California.
(B) A description and certification, statement, under penalty of perjury, of the amount of describing the taxpayer’s qualified shortline railroad expenditures. expenditures, including itemized amounts and the infrastructure maintenance or capital improvement for which the expense was paid or incurred.
(C) The estimated number of miles of railroad track owned or leased in California at the close of the taxable year in which the credit will be claimed if a certificate is issued by the department.
(D) Information regarding the beginning and end of the taxpayer’s taxable year.
(E) Any information deemed necessary by the department to determine whether the taxpayer is a qualified taxpayer.
(F) Any information deemed necessary by the department to determine the amount of the credit.
(3) (A) The department shall evaluate a taxpayer’s application and shall issue a credit certificate upon finding the taxpayer is eligible for the credit allowed by this section on determining that the taxpayer meets all of the following:
(i) Is a qualified taxpayer.
(ii) Will likely continue to be a qualified taxpayer for the taxable year in which the credit certificate is issued.
(iii) Has qualified shortline railroad expenditures.
(iv) Has satisfactorily submitted a complete application pursuant to paragraph (2).
(B) The department shall issue credit certificates on
a first-come-first-served basis, subject to the aggregate amount allowed under paragraph (4) of subdivision (a).(A)
(C)
The certificate shall state the amount of the credit(B)
(D)
The department shall annually provide the board with a list of qualified taxpayers to whom a certificate has been issued and the tax credit amounts allocated to each qualified taxpayer.(E) The board may disallow a credit to a taxpayer that has received a credit certificate from the department if the board finds that the taxpayer does not meet the criteria described in subparagraph (A) of paragraph (3).
(e)
(g) The department and the board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section and Section 23631. section.
(f)
(h) For purposes of complying with Section 41 for the tax credits allowed under this section and Sections 17053.32, 23631, and 23632, the Legislature finds and declares all of the following:
(1) The specific goals, purposes, and objectives the tax credits will achieve include all of the following:
(A) Improving the safety, reliability, and efficiency of shortline and regional rail service, consistent with the 2024 California State Rail Plan.
(B) Preserving and enhancing rail access for existing industrial, agricultural, and commercial shippers, and facilitating new rail-served economic development.
(C) Supporting the diversion of freight movement from trucks to rail by preserving and expanding rail infrastructure capacity, thereby reducing highway congestion, pavement damage, and vehicle emissions.
(D) Supporting job retention and job creation in rail-dependent industries and associated supply chains through increased private capital investment in rail infrastructure.
(2) The detailed performance indicators for the Legislature to use when measuring whether the tax credits meet the goals, purposes, and objectives described in subparagraph (A) include all of the following:
(A) The number of miles of railroad track improved, rehabilitated, or constructed as a result of projects receiving the credit.
(B) The number and type of rail infrastructure projects completed, including track, bridges, sidings, and spurs.
(C) Private capital investment leveraged by the tax credits, expressed as a ratio of private dollars invested per dollar of tax credit claimed.
(3) Data collection requirements to enable the Legislature to determine whether the tax credits are meeting, failing to meet, or exceeding those specific goals, purposes, and objectives include both of the following:
(A) A description of each project for which the credit was claimed, including project location and general scope of work, and, where applicable, the approximate number of track miles improved or constructed.
(B) The amount of qualified expenditures incurred and the amount of credit claimed.
(i) (1) On or before June 30, 2028, and each June 30 thereafter, the department, in collaboration with the board, and to the extent feasible, shall submit a report to the Legislature in compliance with Section 9795 of the Government Code containing the information described in paragraph (3) of subdivision (h) for the most recent taxable year.
(2) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.
(j) This section shall remain in effect only until December 1, 2032, and as of that date is repealed.
Text of SB 1287 as amended, from the official record. Connect Plus keeps every version and highlights what changed.Compare versions