SB 76 — Providing exemption from state severance tax for coal sold to coal-fired power plants located in WV

CS for SB 76 WEST VIRGINIA LEGISLATURE REGULAR SESSION IntroducedCommittee FISCALSubstitute for Senate Bill 76 NOTE By SenatorSenators Phillips [Introducedand Rose [Reported January 14,20, 2026;2026, from the Committee on Energy, Industry and Mining] CS for SB 76 A BILL to amend and reenact §11-13A-3 of the Code of West Virginia, 1931, as amended, relating to providing an exemption from the state severance tax for natural gas and coal sold to natural gas-powered and coal-fired power plants located within the state.

referred to the Committee on Energy, Industry, and Mining;

and then to the Committee on Finance] Intr SB 76 2026R1364 A BILL to amend and reenact §11-13A-3 of the Code of West Virginia, 1931, as amended, relating to providing an exemption from the state severance tax for coal sold to coal-fired power plants located within the State of West Virginia.

Imposition of tax on privilege of severing coal, limestonelimestone, or sandstone, or furnishing certain health care services,services; effective dates therefor;

reductioneffective ofdates severancetherefor; rate for coal mined by underground methods based on seam thickness.

reduction of severance rate for coal mined by underground methods based on seam thickness;

exemption for thermal or steam coal sold to in-state electric generating facilities.

— Upon every person exercising the privilege of engaging or continuing within this state in the business of severing, extracting, reducing to possessionpossession, and producing for sale, profitprofit, or commercial use coal, limestonelimestone, or sandstone, or in the business of furnishing certain health care services, there is hereby an annual privilege tax is levied and shall be collected from every person exercising such privilege an annual privilege tax.tax that privilege.

In the case of coal, the rate of tax includes the thirty-five one hundredths of one percent additional severance tax on coal imposed by the state for the benefit of counties and municipalities as provided in §11-13A-6 of this 1 CS for SB 76 code and the additional severance tax on coal imposed by the state for the benefit of coal- Intr SB 76 2026R1364 producing counties as provided in §11-13A-6a of this code.

(c) "ThermalDefinitions. or steam coal" defined.

-— ForAs purposesused ofin this sectionsection, the termfollowing "thermalphrases orhave steam coal" means coal sold for the purposemeanings ofascribed generatingto electricity.them:

(d)(1) "Certain"Thermal healthor caresteam services"coal" defined.

- For purposes of this section the term "thermal or steam coal" means coal sold for the purpose of generating electricity;

and (2) (d) "Certain health care services" defined.

(d) (e) Tax in addition to other taxes.

(e) (g) Reduction of severance tax rate.

— For tax years beginning after the effective date of this subsection,subsection anyAny person exercising the privilege of engaging within this state in the business of severing coal for the purposes provided in subsection (a) of this section shall be allowed a reduced rate of tax on coal mined by underground methodsmethods. in accordance with the following:

in accordance with the following this subsection.

For coal mined by underground methods from seams with an average thickness of less than 37 inches, the tax imposed in subsection (a) of this section shall be 1 CS for SB 76 one percent of the gross value of the coal produced.

Intr SB 76 2026R1364 (2) This reduced rate of tax applies to any new underground mine producing coal after the effective date of this subsection,subsection from seams of less than 45 inches in average thickness or any existing mine that has not produced coal from seams 45 inches or less in thickness in the 180 days immediately preceding the effective date of this subsection.

— The tax imposed upon providers of health care services under the provisions of this article shall expire, terminateterminate, and cease to be imposed with respect to privileges exercised on or after July 1, 2016.

Termination of the taxes imposed under this section do not 2 CS for SB 76 relieve any person of any liability or duty to pay tax imposed under this article with respect to privileges exercised before the effective date of the termination.

(j) Exemption for thermal or steam coal sold to in-state electric generating facilities.—facilities. Thermal or steam coal severed after March 31, 2026, and sold for the purpose of generating Intr SB 76 2026R1364 electricity to a coal-fired electric generating facility that is physically located within the state of West Virginia shall be exempt from the severance tax imposed by this section.

This— exemptionThermal doesor notsteam extendcoal tosevered theafter thirty-fiveMarch one31, hundredths2026, and sold for the purpose of onegenerating percentelectricity additionalto severancea taxcoal-fired onelectric coalgenerating imposedfacility bythat theis statephysically forlocated thewithin benefitthis ofstate countiesis andexempt municipalitiesfrom asthe providedseverance intax §11-13A-6.imposed by this section.

Thus,This forexemption coaldoes severednot afterapply March 31, 2026, and sold to athe coal-firedthirty-five generatingone facilityhundredths physically located with the state of Westone Virginia,percent theadditional applicable severance tax rateon wouldcoal beimposed 0.35by percentthe tostate be allocated for the benefit of counties and municipalities pursuantas toprovided §11-13A-6.in §11-13A-6 of this code.

NOTE:ARTICLE 13A.

TheSEVERANCE purposeAND ofBUSINESS thisPRIVILEGE billTAX isACT. to encourage and incentivize the sale of thermal or steam coal to coal-fired electric generating facilities, which are located in West Virginia and that serve West Virginia residents, by exempting the sale of such coal from the severance tax, thereby providing cheaper electricity to the state's residents.

Strike-throughs§11-13A-3a. indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.

Imposition of tax on privilege of severing natural gas or oil.

(a) Imposition of tax.

— For the privilege of engaging or continuing within this state in the business of severing natural gas or oil for sale, profit, or commercial use, there an annual privilege tax is levied and shall be collected from every person exercising the privilege an annual privilege tax at the rate and measure provided in subsection (b) of this section.

Provided, That Effective for all taxable periods beginning on or after January 1, 2000 There is an exemption from the imposition of the tax provided in this article on the following:

(1) Free natural gas provided to any surface owner;

(2) Natural gas produced from any well which produced an average of less than 5,000 cubic feet of natural gas per day during the calendar year immediately preceding a given taxable period;

(3) Oil produced from any oil well which produced an average of less than one-half barrel of oil per day during the calendar year immediately preceding a given taxable period;

and (4) For a maximum period of 10 years, all natural gas or oil produced from any well which has not produced marketable quantities of natural gas or oil for five consecutive years immediately preceding the year in which a well is placed back into production and thereafter produces marketable quantities of natural gas or oil;

and 3 CS for SB 76 (5) Natural gas severed after March 31, 2026, and sold for the purpose of generating electricity to a natural gas-powered electric generating facility that is physically located within this state.

(b) Rate and measure of tax.

— The tax imposed in subsection (a) of this section is five percent of the gross value of the natural gas or oil produced by the producer as shown by the gross proceeds derived from the sale thereof by the producer, except as otherwise provided in this article.

Provided, That Effective for taxable periods beginning on or after January 1, 2020: