C.R.S. § 39-26-710: Railroads - construction and building materials - tangible personal property - work equipment - rolling stock.

(1) The following shall be exempt from taxation under the provisions of part 1 of this article:

(a) The sale of construction and building materials to a common carrier by rail operating in interstate or foreign commerce for use by the common carrier in construction and maintenance of its railroad tracks; however, any actual use of such construction and building materials shall, at the time of the actual use, be subject to the tax imposed by part 2 of this article 26 and any use tax imposed pursuant to article 2 of title 29, except as provided in subsection (2)(c) of this section;

(b) The sale of tangible personal property that is to be affixed or attached as a component part of a locomotive, a freight car, railroad work equipment, or other railroad rolling stock; and

(c) The sale of locomotives, freight cars, railroad work equipment, and other railroad rolling stock used or purchased for use in interstate commerce by a railroad company.

(2) The following shall be exempt from taxation under the provisions of part 2 of this article 26:

(a) The storage, use, or consumption of any tangible personal property that is to be affixed or attached as a component part of a locomotive, a freight car, railroad work equipment, or other railroad rolling stock;

(b) The storage, use, or consumption of locomotives, freight cars, railroad work equipment, and other railroad rolling stock used or purchased for use in interstate commerce by a railroad company; and

(c) For tax periods beginning on or after July 1, 2027, the storage, use, or consumption of construction and building materials by or on behalf of a common carrier by rail operating in interstate or foreign commerce when the storage, use, or consumption of the construction and building materials is pursuant to a contract with the state, a department or institution of the state, a political subdivision of the state, or a special district that allows the state, a department or institution of the state, a political subdivision of the state, or a special district to use the railroad's property or tracks for the provision of public passenger rail service. The department of transportation shall notify the department of revenue of the identity of any common carrier eligible for the exemption allowed by this subsection (2)(c).