Coal Tax

There are two types of coal tax in North Dakota – coal conversion facilities privilege tax and coal severance tax.

The coal conversion facilities privilege tax is imposed on electrical generating plants:

• with at least one generating unit with a capacity of 10,000 kilowatts or more,
• other coal conversion facilities that consume 500,000 tons or more of coal per year, and
• coal beneficiation plants.

The coal conversion facilities privilege tax is in lieu of property taxes on the plant. The land on which the plant is located remains subject to property tax.

The coal severance tax is imposed on coal and commercial leonardite that is used for sale or industrial purposes. The coal severance tax is not imposed on:

• coal used for heating buildings in the state,
• coal used by the State or any political subdivision in North Dakota, and
• coal used in agricultural processing and sugar beet refining plants in North Dakota or adjacent states.

The coal severance tax is in lieu of sales and use taxes on the coal and commercial leonardite and property tax on minerals in the earth.

Coal and commercial leonardite are taxed at a flat rate of 37.5 cents per ton.

• An additional 2-cent per ton tax is levied for the Lignite Research Fund.
• A 50% reduction in the 37.5-cent tax is allowed for coal burned in a cogeneration facility designed to use renewable resources to generate 10% or more of its energy output.
• Counties may grant a partial or complete exemption from the counties’ 70% portion of the 37.5-cent tax for coal or commercial leonardite that is shipped out of North Dakota.
• Beginning July 1, 2023, coal severance tax may not be imposed on the first one million tons (907,184.74 metric tons) of coals per year used as a feedstock by a coal processing facility that utilizes coal as a feedstock in this state.