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Coal Excise Tax

In the United States, one of the taxes coal producers must pay is a federal excise tax when they mine coal. Producers pay the tax when the coal is first sold or used.1 The tax does not apply to lignite or to coal mined in the U.S. for export. Learn more about how coal revenues work.

This tax originated in 1977 with the Black Lung Revenue Act. The excise tax is the chief source of revenue for the Black Lung Program and Black Lung Disability Trust Fund (BLDTF), which pays benefits to miners disabled by black lung disease, as well as their eligible survivors and dependents.2

Coal excise tax payments are collected by the Internal Revenue Service and transferred to the BLDTF. Amounts in the BLDTF are available, as provided in appropriation acts, for benefit payments that are administered by the Department of Labor’s Division of Coal Mine Workers’ Compensation.3

Coal excise tax revenue4

Bar chart showing Coal Excise tax revenue. The chart compares Mined Underground and Surface mined.

Coal excise tax rates

The current tax rate is $1.10 per ton for coal from underground mines and $0.55 per ton for coal from surface mines. Both rates are limited to a maximum of 4.4 percent of the coal’s selling price.5

Type of mining Excise tax rates
Surface mining $0.55 per ton or 4.4% of the sales price
(whichever is lower)
Subsurface mining $1.10 per ton or 4.4% of the sales price
(whichever is lower)

The coal excise tax rates are scheduled to decline to $0.50 per ton for underground mines and $0.25 per ton for surface mines (both limited to two percent of the coal’s selling price). This change will occur either on January 1, 2019 or the first January 1st when there are no more repayable advances from the General Fund to the Trust Fund and no unpaid interest on previous such advances.

Notes

  1. A producer is any person or entity that owns the coal after it’s mined from the ground.

  2. Department of Labor, FY2016 Black Lung Disability Trust Fund Budget Justification (PDF), 2016: p. 8

  3. Department of Labor, FY2015 Agency Financial Report (PDF), Fiscal Year 2015

  4. Internal Revenue Service, Federal Excise Taxes Reported to or Collected by the Internal Revenue Service, Alcohol and Tobacco Tax and Trade Bureau, and Customs Service, 2013: Historical Table 20

  5. Department of Labor, FY2016 Black Lung Disability Trust Fund Budget Justification (PDF), 2016: p. 8