November 10, 2026 - Coal generated nearly $193 million in state and local severance taxes in West Virginia during fiscal year 2026, including more than $33 million for local governments, according to state Tax Division figures that add coal-specific detail to a new Treasury report on the energy industry’s role in public finances.

The Tax Division lists $159.5 million in regular state coal severance taxes and $33.1 million in local distributions, for a combined $192.6 million. That total was down 10.3% from $214.6 million in fiscal 2025, illustrating the revenue swings highlighted in the Treasury’s analysis. 

State Treasurer Larry Pack released the report, “Importance of West Virginia Severance Tax,” on November 10. Prepared by Treasury Strategic Analyst Mark Muchow, a former deputy revenue secretary, it examines how taxes on coal, natural gas and oil support state and local budgets.

Pack said the state’s energy industries “remain a driving force behind our economy, and our state budget depends heavily on the revenue they generate.” 

The report puts total severance-tax deposits into the General Revenue Fund at $534.9 million for fiscal 2026, which ended June 30. That figure covers multiple natural resources and should not be confused with coal-only collections or the broader total of state and local severance taxes.

Coal nevertheless remained a substantial source of local revenue. Its $33.1 million represented approximately 64% of the $51.6 million in total local distributions listed in the Tax Division’s fiscal 2026 severance-tax summary. 

Muchow’s report finds that severance taxes have supplied an average of 9% of General Revenue Fund collections over the past 25 years. They rank behind personal income taxes and the Consumer Sales and Service Tax as a major source of state general revenue.

General Revenue Fund severance-tax collections increased from $163.2 million in fiscal 2001 to $534.9 million in fiscal 2026. The report calculates average annual growth of nearly 4.9%, compared with 3% for overall General Revenue Fund collections.

The composition of that revenue has changed. Natural gas and oil accounted for more than 68% of total severance-tax collections in fiscal 2026, compared with 20% in fiscal 2004, according to the Treasury report. 

Coal’s contribution extends beyond producing counties. The local coal-tax distribution system directs 75% of the net proceeds from the dedicated 0.35% local coal severance tax to coal-producing counties, based on their share of coal tonnage. The remaining 25% is distributed among all counties and municipalities using population-based formulas. 

State law allows those regular local coal-tax distributions to be spent for public purposes determined by county commissions and municipal governments. A separate Coal County Reallocated Severance Tax Fund supports producing counties, with money restricted to economic development and infrastructure projects. That program reallocates part of existing state coal-tax receipts; it is not another 5-percentage-point tax on coal.

The distinction matters because the two programs have different spending rules. Eligible projects under the reallocated fund include water and wastewater facilities, roads, bridges, broadband, industrial sites and certain work associated with post-mining land use. The law also permits project-development expenses such as engineering plans, site assessments and feasibility work. 

Recent Treasury records show those revenues continuing to reach communities. The October 2026 regular coal severance distribution totaled $4.68 million. Within its production-based portion, Marshall County received $940,378, Wetzel County $640,517, Wyoming County $335,809 and Logan County $301,169. Those October payments fall in fiscal 2027 and are separate from the fiscal 2026 figures in the report.

West Virginia’s coal tax varies by product and qualifying mining conditions. The Tax Division describes a standard combined state and local rate of 5% of gross receipts. Steam coal sold directly to electric power producers is generally taxed at a combined 3%, while qualifying thin-seam production receives lower rates. These taxes are based on coal’s value rather than a company’s net profit.

The Treasury report also places tax receipts alongside coal’s wider economic role. It cites a West Virginia University Bureau of Business and Economic Research study estimating $16.4 billion in economic activity from coal mining and another $4.6 billion from coal-fired generation. The study, commissioned by the West Virginia Coal Association and announced in March 2026, examines 2024 activity. Those economic-impact estimates are separate from the fiscal 2026 tax collections. 

Muchow’s analysis connects earlier periods of rising severance-tax receipts with major state tax cuts, including the phaseout of the food sales tax and the personal income tax reductions enacted in 2023. It also cautions that receipts depend on changing energy prices and production.

The report recommends continued support for coal, natural gas and oil alongside investment and economic diversification. Its budget message is that revenues from resource production remain valuable to West Virginia, while their variability requires care when policymakers consider lasting tax reductions and spending commitments.