Coal Severance Tax
Overview
Coal mined in Montana is taxed with the Coal Severance Tax to be reported on the Coal Severance Tax return.
- Businesses producing more than 50,000 tons of coal per year pay the tax on all production over 20,000 tons.
- Businesses producing less than 50,000 tons per year are exempt from the tax.
Tax Rates
Coal severance tax rates are based on the heat content (BTUs per pound) of the coal and the method of extraction.
Coal Severance Tax Rates by extraction type and BTU level
| Extraction Type | Under 7,000 BTU | 7,000 BTU or Higher |
|---|---|---|
| Surface Mined Coal | 10% of value | 15% of value |
| Underground Mined Coal | 3% of value | 4% of value |
Determining Coal Value
The severance tax applies to the contract sales price of the coal.
The contract sales price is the sales price of the coal extracted and prepared for shipment FOB Mine, minus the required production taxes.
Formula:
Contract Sales Price = Price FOB Mine – Production Taxes + Royalties
Production Taxes
Production taxes include:
- State severance tax
- Resource Indemnity Trust and Ground Water Assessment Tax
- Local gross proceeds tax
- Federal reclamation taxes
- Federal Black Lung tax
Royalties
The contract sales price includes up to $0.15 per ton royalties paid to federal, state, and tribal governments and all royalties paid to other mineral rights owners.
Formula:
Royalties = ((Federal Tons + State Tons + Tribal Tons) x $0.15) + Other Royalties
Reporting and Payment Options
File and pay through our TransAction Portal (TAP)
Due Dates
The return is due 30 days after the end of each calendar quarter:
- First Quarter: April 30
- Second Quarter: July 30
- Third Quarter: October 30
- Fourth Quarter: January 30
Penalties and Interest
The Coal Severance Tax is subject to uniform penalties and interest.
Revenue Distribution
We collect the coal severance tax and distribute the revenues according to 15-35-108, MCA.