U.S. Rep. Darin LaHood (R-Ill.) alongside U.S. Rep. Brad Schneider (D-Ill.) and 41 additional cosponsors (32 original) in mid-February reintroduced the Freight RAILCAR (Rail Assets Investment to Launch Commercial Activity Revitalization ) Act, bipartisan legislation backed by the Railway Supply Institute (RSI) and the Rail Security Alliance (RSA) that would “encourage the replacement and modernization of the U.S. freight railcar fleet.” Now, Senators Jim Banks (R-Ind.) and Chris Coons (D-Del.) have introduced a companion bill, S. 2758. The legislation’s intent, supporters say, “would lead to a renewed investment in higher capacity, fuel-efficient freight railcar manufacturing in the United States.” It would “provide a nonrefundable 10% tax credit to help offset the costs to replace or upgrade existing railcars to improve fuel efficiency or capacity. ”
The current North American railcar fleet comprises more than 1.6 million railcars, with roughly 20% in storage.
“The companion bill marks the first time the Freight RAILCAR Act has been introduced in the Senate,” said RSI President Jim Riley. “We encourage Congress to pass this vital legislation, which will encourage investment in the modernization of the North American railcar fleet, improve sustainability, and support American manufacturing jobs.”
BACKGROUND
The Freight RAILCAR Act of 2025 (H.R. 1200) debuted in 2020 (H.R. 8082), and was reintroduced in 2021 (H.R. 2289), 2022 (H.R. 7902), and 2023 (H.R. 838). In all these instances, the legislation went nowhere and did not produce a companion Senate bill. The Act would provide a nonrefundable 10% tax credit for the replacement or modification of existing railcars over a three-year period. The credit is limited to 1,000 new freight cars per taxpayer, and existing railcars must have been in service during the 48 months prior to enactment.
“What we need to see is an equipment cycle driven by demand, not by tax credits or congestion or poor service—those never end well,” commented Railway Age Financial Editor David Nahass in February. “It seems odd that the RAILCAR Act would be re-proposed while the issues around tariffs for Canada and Mexico remain so unsettled. With more than 90% of the railcars manufactured in North America being produced outside the U.S., it feels like the Illinois Congressional team should take some time to read the room before proposing tone-deaf legislation. Perhaps their effort would be better spent by working on ensuring carveouts for railcar and railcar component manufacturing from the proposed blanket tariffs applied against Canada and Mexico and from the steel and aluminum tariffs currently being proposed. There is zero chance that the proposed legislation causes a pivot to increase railcar production in the U.S. at this time.”
According to RSI, the Freight RAILCAR Act:
- “[E]ncourages greater investment by introducing time-limited tax credits to offset costs associated with replacing or modernizing railcars that are outdated. Due to modern manufacturing methods, innovative new materials, and improved safety standards, new railcars have significant safety and efficiency improvements, which increases reliability across the board.”
- Supports environmental sustainability by “encouraging the replacement of older railcars with new, more efficient ones.” If just one-third of the nearly 300,000 outdated hopper cars were replaced by higher capacity railcars, RSA said, 4.3 million gallons of diesel fuel would be saved in the first year alone.
- “[S]upports supply chain reliability and the critical movement of essential goods and services on the U.S. rail interchange system every day.”
- Provides economic benefits. “The freight rail supply industry is a key contributor to the economies of the U.S. as seen in its 240,000 American jobs and $75 billion GDP in 2023 alone,” RSA reported. “The Act will spur job growth within the freight rail manufacturing industry, ensuring thousands of family-wage jobs are sustained and new opportunities are created.”
The Freight RAILCAR Act was reintroduced on Feb. 11 and referred to the House Committee on Ways and Means on the same day.
