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Coal excise tax, lower tax rates beginning January 2019

Coal excise tax, lower tax rates beginning January 2019

Effective January 1, 2019, the excise tax rates imposed under section 4121 on a producer’s sale of coal mined from coal mines in the United States have been lowered.


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The funds generated under section 4121 are dedicated to the “Black Lung Disability Trust Fund.”

The rate of tax before 2019 was $1.10 for coal from underground mines, and $0.55 for coal from surface mines. The excise tax was limited to 4.4% per ton, and did not apply to lignite.

Beginning after December 31, 2018, the excise tax is reduced as follows:

  • $0.50 for coal from underground mines
  • $0.25 for coal from surface mines 
  • The excise tax applicable percentage limitation is 2% per ton

KPMG observation

Taking into account that the rates have dropped by more than 50% from 2018, taxpayers may consider evaluating current deposit methods as the safe-harbor two-quarter look-back may provide significant over-deposits of tax.  

While the rates are currently lower, taxpayers need to watch for possible future legislation that may reinstate the increased rates—perhaps as part of an “extenders bill” or possibly tucked into the next tax legislation that is passed by Congress. 

For more information, contact a tax professional with KPMG’s Excise Tax Practice group:

Taylor Cortright | +1 (202) 533 6188 |

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