Coal

Coal Conversion Facilities

The coal conversion facilities privilege tax is imposed on electrical generating plants that have 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. It is in lieu of property taxes on the plant itself, but the land on which the plant is located remains subject to property tax.

Coal Severance Tax

The coal severance tax is imposed on all coal severed for sale or industrial purposes, except coal used for heating buildings in the state, coal used by the state or any political subdivision of the state, and coal used in agricultural processing and sugar beet refining plants in the state or adjacent states. The tax is in lieu of sales and use taxes on the coal and property tax on minerals in the earth. Coal is 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 that is shipped out of state.

Transmission Line Tax

Cooperative-owned transmission lines of 230 kilovolts or larger pay an annual tax of $225 per mile in lieu of property tax on the lines and any substation used in delivering electrical energy. For a transmission line initially placed in service on or after October 1, 2002, the tax is $300 per mile, but does not apply for the first year and must be reduced by 75 percent for the second year, 50 percent for the third year, and 25 percent for the fourth year.