A new legislative proposal in the House of Representatives aims to modernize and expand the U.S. freight rail system through a tax incentive program. The Freight Rail Assets Investment to Launch Commercial Activity Revitalization Act (Freight Railcar) Act of 2025, reintroduced by Illinois Representatives Darin LaHood and Brad Schneider, seeks to provide a 10% tax credit for upgrading or expanding the nation's railcar fleet. This bipartisan initiative, originally introduced in 2023, targets improvements in fuel efficiency and capacity, aiming to enhance supply chain resilience and support American manufacturing jobs. With 40 co-sponsors backing the bill, it represents a significant effort to address infrastructure challenges while promoting economic growth.

The proposed three-year, 10% tax credit is designed to offset the costs associated with replacing two existing railcars with one that improves performance by at least 8%, or refurbishing an existing railcar to achieve similar gains. Additionally, the legislation supports upgrading tank cars to meet DOT-117 specifications. These measures are intended to bring the U.S. rail fleet into the 21st century, improving both operational efficiency and environmental sustainability. Representative LaHood emphasized the importance of Illinois' rail network as a critical economic driver for agriculture, manufacturing, and local communities. He highlighted that this legislation would not only boost job creation but also strengthen national infrastructure.

Representative Schneider echoed these sentiments, noting that a robust rail network is essential for commuters, farmers, and manufacturers across Illinois. Any weaknesses in this network can have long-term consequences for the supply chain, making it crucial to invest in modernization efforts. The bill's proponents argue that by bringing the rail fleet up to date, they can ensure supply chain reliability and promote quality, well-paying jobs in the rail sector. Erik Olson, executive director of the Rail Security Alliance, praised the leadership of Representatives LaHood and Schneider, stating that the bill is vital for ensuring American economic and national security.

The legislation also addresses the need to update approximately 250,000 railcars over the next 15 years, according to the Rail Security Alliance. The current North American railcar fleet consists of more than 1.6 million units, with about 321,000 in storage. While the tax credit applies to privately or publicly owned cars, it excludes those under state control. The bill's provisions reflect lessons learned from past initiatives, such as the Incentive Per Diem legislation of the 1970s, which financed the construction of 40,000 new boxcars but ultimately collapsed during the early '80s recession. The new measure aims to protect 65,000 American manufacturing jobs, invest in more efficient railcars, and reduce the sector's carbon footprint, all while helping the rail supply industry thrive in the current economic climate.

Ultimately, the Freight Railcar Act of 2025 represents a strategic investment in America's infrastructure. By incentivizing upgrades and expansions, it seeks to bolster the efficiency and reliability of the nation's rail system. This initiative promises to enhance supply chain resilience, support manufacturing jobs, and contribute to a more sustainable future for the rail industry. Through this legislation, policymakers aim to address immediate economic needs while laying the groundwork for long-term prosperity in the transportation sector.