Railroad Transportation

Nontaxable charges

The amount a rail transportation company charges to transport people or property isn’t taxable. This includes:

  • Freight and service fees

    Examples:

    • Freight charges on the rail company’s cars
    • Charges to move a customer’s railroad stock
    • Logistics services
  • Charges to transport people

Taxable purchases

Rail transportation companies must pay tax on items they buy to operate the business. These items include:

  • Motor vehicles and repair parts for motor vehicles
  • Warehouse tools and supplies
  • Safety equipment and supplies
  • Office furniture and supplies
  • Packing and shipping materials
  • Food to give away to passengers; see Complimentary items for more information
  • Logo merchandise and promotional items given away
  • Items that become part of real property
  • Locomotives and other rolling stock
  • Parts used in Idaho to repair rolling stock
  • Fuel, when it’s not necessary to or primarily used in:
    • Testing remanufactured or rebuilding rolling stock engines
    • Equipment in the remanufacturing or rebuilding of rolling stock engines

Exemption for railroad rolling stock

A rail transportation company can buy certain equipment tax exempt.

Qualifying railroad rolling stock

Railroad rolling stock that qualifies for the exemption is property that’s both:

  • Rebuilt or remanufactured in Idaho
  • Used in interstate commerce for at least three consecutive months before being rebuilt or remanufactured in Idaho

    Examples:

    • Flanged-wheel locomotives
    • Railroad cars
    • Maintenance-of-way equipment
    • Other flanged-wheel vehicles designed and manufactured specifically for use on railroad tracks and railroad systems
    • Component parts of these locomotives, cars, equipment and vehicles

Qualifying parts, materials and equipment

Parts, materials and equipment for rebuilding and remanufacturing railroad rolling stock in Idaho that qualify for the exemptions are:

  • Property that becomes:
    • Part of the rolling stock
    • Part of the equipment used in rebuilding or remanufacturing the rolling stock
  • Materials used or consumed in the process of remanufacturing or rebuilding railroad stock
  • Equipment necessary to, and primarily used in, the process of remanufacturing or rebuilding railroad stock
  • Fuel used in:
    • Testing remanufactured or rebuilt railroad stock engines
    • Equipment that’s necessary to, and primarily used in, the process of remanufacturing or rebuilding railroad stock