I 
118TH CONGRESS 
1ST SESSION 
H. R. 838 
To amend the Internal Revenue Code of 1986 to provide a tax credit to 
encourage the replacement or modernization of inefficient, outdated 
freight railcars, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 6, 2023 
Mr. LAHOOD (for himself, Mr. SCHNEIDER, Mr. BACON, Mr. BISHOP of Geor-
gia, Mr. BANKS, Mr. BLUMENAUER, Mr. CARL, Ms. BONAMICI, Mr. 
CRAWFORD, Mr. CUELLAR, Mr. ELLZEY, Mr. KILDEE, Mr. FERGUSON, 
Mr. PANETTA, Ms. GRANGER, Ms. SA´NCHEZ, Mr. GRAVES of Missouri, 
Ms. SEWELL, Mr. TONY GONZALES of Texas, Ms. TITUS, Mr. HUDSON, 
Ms. DAVIDS of Kansas, Mr. HERN, Mr. HUNT, Mr. MCCAUL, Mr. 
MORAN, Mr. MURPHY, Mr. ROGERS of Alabama, Mr. WILLIAMS of Texas, 
and Ms. VAN DUYNE) introduced the following bill; which was referred 
to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
a tax credit to encourage the replacement or moderniza-
tion of inefficient, outdated freight railcars, and for other 
purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Freight Rail Assist-
ance and Investment to Launch Coronavirus-era Activity 
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and Recovery Act of 2023’’ or the ‘‘Freight RAILCAR 
Act of 2023’’. 
SEC. 2. FREIGHT RAILCAR MODERNIZATION CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
section: 
‘‘SEC. 45BB. FREIGHT RAILCAR MODERNIZATION CREDIT. 
‘‘(a) IN GENERAL.—For purposes of section 38, the 
freight railcar modernization credit determined under this 
section for the taxable year is an amount equal to 10 per-
cent of the taxpayer’s freight railcar fleet modernization 
expenses. 
‘‘(b) LIMITATION.—No more than 2,000 qualified 
freight railcars per taxpayer may be taken into account 
for purposes of determining the credit under subsection 
(a) with respect to a taxable year. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) FREIGHT RAILCAR FLEET MODERNIZATION 
EXPENSES.—The term ‘freight railcar fleet mod-
ernization expenses’ means the sum of the qualifying 
railcar replacement and modernization amount. 
‘‘(2) QUALIFYING RAILCAR REPLACEMENT AND 
MODERNIZATION
AMOUNT.—The term ‘qualifying 
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railcar replacement and modernization amount’ 
means— 
‘‘(A) the basis of any qualified newly built 
replacement railcar placed in service by the tax-
payer during the taxable year, plus 
‘‘(B) the qualified railcar modernization 
expenditures of the taxpayer for the taxable 
year. 
‘‘(3) QUALIFIED NEWLY BUILT REPLACEMENT 
RAILCAR.—The term ‘qualified newly built replace-
ment railcar’ means a qualified freight railcar 
which— 
‘‘(A) is built after the date of the enact-
ment of this section, 
‘‘(B) is ordered or originally placed in serv-
ice before the date that is three years after the 
date of the enactment of this section, and 
‘‘(C) replaces two freight railcars owned by 
the taxpayer that— 
‘‘(i) were in service within the 48 
months preceding the beginning of the tax-
able year, and 
‘‘(ii) which were both scrapped and 
permanently removed from the AAR Umler 
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System master file during such taxable 
year. 
‘‘(4) QUALIFIED FREIGHT RAILCAR.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
freight railcar’ means a freight railcar that— 
‘‘(i) is either acquired or modernized 
by the taxpayer after the date of the enact-
ment of this section, 
‘‘(ii) meets the significant improve-
ment requirements for capacity, fuel effi-
ciency, or performance of subparagraph 
(B), 
‘‘(iii) was built in a qualified facility, 
and 
‘‘(iv) with respect to which no credit 
under this section was previously claimed 
by any taxpayer. 
‘‘(B) SIGNIFICANT
IMPROVEMENT.—For 
purposes of this paragraph, an improvement in 
capacity or fuel efficiency and performance with 
respect to a modernized freight railcar is a sig-
nificant improvement if— 
‘‘(i) such capacity or fuel efficiency, as 
the case may be, is increased by at least 8 
percent, or 
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‘‘(ii) in the case of performance, the 
qualified freight railcar meets the require-
ments of the Association of American Rail-
roads Standard S–286 or is modernized to 
meet the design standards set forth in final 
rule HM–251 of the Pipeline and Haz-
ardous Materials Safety Administration (as 
amended by HM–251C). 
‘‘(C) MODERNIZED.—The term ‘modern-
ized’ means modified, retrofitted, converted or 
rebuilt for the purpose of meeting the signifi-
cant improvement criteria of subparagraph (B). 
‘‘(5) QUALIFIED RAILCAR MODERNIZATION EX-
PENDITURE.—The term ‘qualified railcar moderniza-
tion expenditure’ means any amount paid or in-
curred— 
‘‘(A) in connection with the modernization 
of a freight railcar resulting in such railcar 
being designated a qualified freight railcar, and 
‘‘(B) which is properly chargeable to a cap-
ital account with respect to such freight railcar. 
‘‘(6) QUALIFIED FACILITY.—The term ‘quali-
fied facility’ means a facility that is not owned or 
leased by an entity that would be ineligible for an 
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‘‘(5) ENTITIES
OWNED
OR
CONTROLLED
BY 
STATE-OWNED ENTERPRISES INELIGIBLE.—No cred-
it under subsection (a) shall be allowed to any tax-
payer that would be ineligible for an award of a con-
tract or subcontract under 49 U.S.C. 5323(u). 
‘‘(e) TERMINATION.—This section shall not apply to 
any qualifying railcar replacement and modernization 
amount after the date that is three years after the date 
of the enactment of this section.’’. 
(b) CREDIT ALLOWED AS BUSINESS CREDIT.—Sec-
tion 38(b) of the Internal Revenue Code of 1986 (relating 
to current year business credit) is amended by striking 
‘‘plus’’ at the end of paragraph (40), by striking the period 
at the end of paragraph (41) and inserting ‘‘, plus’’ and 
by inserting at the end thereof the following new para-
graph: 
‘‘(42) the freight railcar modernization credit 
determined under section 45BB.’’. 
(c) COORDINATION
WITH
SECTION
55.—Section 
38(c)(4)(B) of the Internal Revenue Code of 1986 is 
amended by redesignating clauses (x), (xi), and (xii) as 
clauses (xi), (xii), and (xiii), respectively, and by inserting 
after clause (ix) the following new clause: 
‘‘(x) the freight railcar modernization 
credit determined under section 45BB,’’. 
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(d) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by in-
serting after the item relating to section 45AA the fol-
lowing new item: 
‘‘Sec. 45BB. Freight railcar modernization credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service, and 
amounts paid or incurred, after December 31, 2022. 
SEC. 3. REPORT ON THE FREIGHT RAILCAR MODERNIZA-
TION CREDIT. 
(a) IN GENERAL.—Not later than 3 years after the 
date of the enactment of this Act, the Secretary of the 
Treasury (or the Secretary’s delegate), shall submit to the 
Committee on Ways and Means of the House of Rep-
resentatives and the Committee on Finance of the Senate 
a report on activity with respect to the qualified freight 
railcar credit under section 45BB of the Internal Revenue 
Code of 1986. 
(b) REPORT
CONTENTS.—The report submitted 
under subsection (a) shall contain information with re-
spect to the following: 
(1) The number of times the credit was 
claimed. 
(2) The number of railcars scrapped as a result 
of the credit. 
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(3) The number of new railcars entered into 
contract as a result of the credit. 
(4) The number of new railcars built as a result 
of the credit. 
Æ 
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