WHAT EXACTLY IS A SEVERANCE
TAX?
Severance taxes are levied on the removal of certain natural resources from
the soil or waters of the State of Alabama?
WHAT ITEMS ARE
TAXED?
The statewide severance taxes are collected from oil, gas, coal, forest products,
and iron ore. In addition, local taxes are collected for certain counties on
coal, stone, rock, clay, sand, and gravel.
IS THERE A GREAT
DEAL OF OIL AND GAS PRODUCTION IN ALABAMA?
Alabama is a major producer of both oil and gas in the United States. North Alabama is
one of the great sources of methane gas which is extracted from coal seams.
Many of the Southwestern counties have a great deal of oil production. There
is also a large amount of activity currently in the Gulf waters off the Alabama
coast. This offshore activity generates a great deal of gas and any production
occurring within state waters is subject to Alabama severance taxes.
WHAT ARE THE SEVERANCE
TAX RATES?
| PRODUCT | PRIVILEGE TAX | OTHER TAX |
|---|---|---|
| Oil and Gas | 2% to 8% of value | production tax at 1% or 2% of value |
| Iron Ore | $.03/ton | |
| Forest Products | Various | processor's tax 50% of privilege tax |
| Coal | $.335/ton |
WHAT ARE THE LOCAL
SEVERANCE TAX RATES?
| Locality | Tax Type | Rate | Authority |
|---|---|---|---|
| Statewide - Uniform (Except: Geneva, Lamar, Lee, Wilcox) |
Natural Minerals, Sand, Gravel, Sandstone, Granite, Shale, Clay, Dolomite, Limestone | 10¢ per ton | §§40-13-50, 40-13-61, Code of Alabama, 1975 |
| Coosa County | Sand, Clay, Silt, Loam, Dirt, Gravel, Rock, Sand-gravel, Sand-Clay |
25¢ per ton | 99-544 |
| Jackson County | Coal | 20¢ per ton | 79-349, 97-220 |
| Marshall County | Coal | 20¢ per ton | 81-482 |