Domestic Manufacturing Deduction for Coal and Other Hard Mineral Fossil Fuels


Energy - Fossil Fuels

Subsidy Type

Tax Expenditure

Committees of Jurisdiction

Senate Finance Committee

$13 FY 16 Budget Score (in mil.)
$448 FY 16-25 Budget Score (in mil.)

For income from qualified domestic production activities, which includes coal and other hard minerals, this tax break allows a deduction equal to 9 percent of income derived from qualified activity, limited to 50 percent of the manufacturers’ W-2 wages. Qualified production applies to property that is “manufactured, produced, grown or extracted within the United States.” The deduction is designed to be approximately a 3-percentage-point reduction in the tax on eligible activities. Congress enacted this provision in the American Jobs Creation Act of 2004 replacing the Foreign Sales Corporation/Extraterritorial Income system.

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