The Freight RAILCAR Act of 2025 introduces a new tax credit, the Freight Railcar Modernization Credit , into the Internal Revenue Code. This credit, equal to 10 percent of a taxpayer's freight railcar fleet modernization expenses, is designed to encourage the upgrade and replacement of older, less efficient freight railcars. Its primary goal is to revitalize commercial activity by improving the nation's rail infrastructure. The credit applies to two main categories of expenses: the basis of qualified newly built replacement railcars and qualified railcar modernization expenditures . A new replacement railcar must be built after the bill's enactment, ordered or placed in service within three years, and specifically replace two older railcars that are scrapped and permanently removed from service. Modernization expenditures must result in a "qualified freight railcar" that meets significant improvement criteria, such as an 8 percent increase in capacity or adherence to specific industry performance standards. There are several important limitations and conditions for this credit. Taxpayers can claim the credit for a maximum of 1,000 qualified freight railcars per year. The bill includes special rules regarding basis adjustments, sale-leaseback arrangements, and syndication, and explicitly denies the credit to entities owned or controlled by state-owned enterprises. The credit is temporary, terminating for amounts incurred three years after the date of enactment, and applies to property placed in service or expenses incurred after December 31, 2024. To assess the credit's effectiveness, the bill mandates that the Secretary of the Treasury submit a report within three years of enactment. This report will detail key metrics, including the number of times the credit was claimed, the number of railcars scrapped, and the number of new railcars contracted for and built as a direct result of this incentive.