Capital Gains Treatment for Income from Qualified Timber, Coal, and Iron Ore


Public Lands

Subsidy Type

Tax Expenditure

Committees of Jurisdiction

Senate Finance Committee

$300 FY 16 Budget Score (in mil.)
$3,900 FY 16-25 Budget Score (in mil.)

Individual owners, as opposed to companies, are allowed to treat income from dispositions of timber, coal, and iron ore 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. Income from cutting timber which has been owned, or the right to cut which has been owned for more than one year also qualifies as a capital gain. The current maximum capital gains rate is 20 percent, compared to the top individual tax rate of 39.6 percent. Capital gains treatment of income from cutting timber was added in the Revenue Act of 1943. Such treatment for coal disposals was enacted in the Revenue Act of 1951. The provision for income from iron ore disposals was included in the Revenue Act of 1964.

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