Capital Gains Treatment for Royalties from Coal


Public Lands

Subsidy Type

Tax Expenditure

Committees of Jurisdiction

House Committee on Ways and Means, Senate Finance Committee

$50 FY 23 Budget Score (in mil.)
$610 FY 23-32 Budget Score (in mil.)

Individual owners, as opposed to companies, are allowed to treat income from dispositions of coal held for more than one year before disposal as a capital gain, rather than ordinary income, thus allowing them to be taxed at a lower rate. The current maximum applicable capital gains rate is 20 percent, compared to the top individual tax rate of 37 percent. Capital gains treatment for coal disposals was enacted in the Revenue Act of 1951.

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