Sections 77-3134 to 77-3143 shall be known and may be cited as the Nebraska Shortline Rail Modernization Act.

For purposes of the Nebraska Shortline Rail Modernization Act:

(1) Department means the Department of Revenue;

(2) Eligible taxpayer means any shortline railroad company located wholly or partly in Nebraska that is classified by the federal Surface Transportation Board as a Class III railroad;

(3)(a) Qualified shortline railroad maintenance expenditures means gross expenditures for railroad infrastructure maintenance and capital improvements, including, but not limited to, rail, 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 III railroad.

(b) Qualified shortline railroad maintenance expenditures does not include expenditures used to generate a federal tax credit or expenditures funded by a federal grant; and

(4) Taxpayer means any individual, corporation, partnership, limited liability company, trust, estate, or other entity subject to the income tax imposed by the Nebraska Revenue Act of 1967 or any tax imposed by sections 77-907 to 77-918 or 77-3801 to 77-3807.

(1) For taxable years beginning or deemed to begin on or after January 1, 2025, under the Internal Revenue Code of 1986, as amended, an eligible taxpayer shall be allowed a credit against the income tax imposed by the Nebraska Revenue Act of 1967 or any tax imposed by sections 77-907 to 77-918 or 77-3801 to 77-3807 for qualified shortline railroad maintenance expenditures.

(2) The credit provided in this section shall be a nonrefundable tax credit equal to fifty percent of the qualified shortline railroad maintenance expenditures incurred during the taxable year by the eligible taxpayer. The amount of the credit may not exceed an amount equal to one thousand five hundred dollars multiplied by the number of miles of railroad track owned or leased in the state by the eligible taxpayer at the end of the taxable year.

(3) The total amount of tax credits allowed in a fiscal year under the Nebraska Shortline Rail Modernization Act shall not exceed five hundred thousand dollars for fiscal year 2025-26 and one million dollars for any fiscal year thereafter.

To receive tax credits under the Nebraska Shortline Rail Modernization Act, an eligible taxpayer shall submit an application to the department on a form prescribed by the department after incurring the relevant qualified shortline railroad maintenance expenditures. The application shall be submitted no later than May 1 of the calendar year immediately following the calendar year in which the expenditures were incurred. The application shall include the following information:

(1) The number of miles of railroad track owned or leased in this state by the eligible taxpayer; and

(2) A description of the amount of qualified shortline railroad maintenance expenditures incurred by the eligible taxpayer.

(1) If the department determines that an application is complete and that the eligible taxpayer qualifies for tax credits under the Nebraska Shortline Rail Modernization Act, the department shall approve the application and issue a tax credit certificate to the eligible taxpayer. The certificate shall include the following information:

(a) An identification number for the certificate;

(b) The date of issuance for the certificate; and

(c) The amount of the tax credit allowed under the act for the eligible taxpayer.

(2) The department shall consider and approve applications for tax credits under the act in the order in which the applications are received.

(1) A taxpayer shall claim the tax credit under the Nebraska Shortline Rail Modernization Act by attaching the tax credit certification received from the department under section 77-3138 to its tax return.

(2) Any amount of the credit that is unused may be carried forward and applied against the taxpayer's tax liability for the next five taxable years immediately following the taxable year in which the credit was first allowed.

The tax credits allowed under the Nebraska Shortline Rail Modernization Act may be assigned by the eligible taxpayer to another taxpayer by written agreement at any time during the taxable year in which the credit was first allowed for the eligible taxpayer or in the five taxable years immediately following the taxable year in which the credit was first allowed for the eligible taxpayer. The assignor and assignee shall jointly file a copy of the written assignment agreement with the department within thirty days of the assignment. The written agreement shall contain the name, address, and taxpayer identification number of the parties to the assignment, the taxable year the eligible taxpayer incurred the expenditures, the amount of credit being assigned, and all taxable years for which the credit may be claimed.

Any tax credit allowable to a partnership, a limited liability company, a subchapter S corporation, or an estate or trust may be distributed to the partners, limited liability company members, shareholders, or beneficiaries in the same manner as income is distributed.

The department may adopt and promulgate rules and regulations to carry out the Nebraska Shortline Rail Modernization Act.

There shall be no new applications for tax credits filed under the Nebraska Shortline Rail Modernization Act after December 31, 2033. All applications and all credits pending or approved before such date shall continue in full force and effect.