IL SB3765

Creates the Short Line Railroad Modernization Act, establishing an income tax credit equal to 50% of qualified railroad expenditures or qualified new rail infrastructure expenditures for Class II and Class III railroads in Illinois.

Caps the credit for qualified railroad expenditures at $5,000 per mile of track owned or leased, with an annual aggregate limit of $9 million for all taxpayers.

Limits credits for new rail infrastructure expenditures to $2 million per rail-served customer location, with an annual aggregate cap of $10 million.

Applies to taxable years beginning after January 1, 2026 and before January 1, 2036, with unused credits carrying forward for up to 5 years and the program sunsetting December 31, 2036.

Prioritizes projects in Enterprise Zones or counties with populations under 500,000, and those serving value-added agriculture, advanced manufacturing, or sustainable industries.