Sponsors (17)
Official title: To amend the Internal Revenue Code of 1986 to repeal fossil fuel subsidies for oil companies, and for other purposes.
Introduced January 14, 2025 by Sean Casten · Last progress January 14, 2025
The bill raises federal revenue and tightens or eliminates many fossil‑fuel tax preferences—supporting spill‑response funding and simplifying some tax administration—at the cost of higher tax burdens and compliance complexity for oil and gas firms, likely reduced investment/jobs in producing regions, and the potential for higher energy prices for consumers.
U.S. taxpayers and the federal government will likely collect higher revenue by removing or limiting multiple fossil-fuel tax preferences (e.g., LIFO relief limits, repealed credits and deductions), narrowing long-standing tax expenditures and leveling tax treatment across industries.
Homeowners, rural communities, and the public will gain stronger spill-response funding and clearer liability coverage because the petroleum-excise tax base is expanded (includes bitumen/tar sands/kerogen-derived oils) and Treasury must target products posing significant spill hazards.
General taxpayers, Treasury/IRS, and many businesses will face clearer rules and reduced loopholes as the bill tightens aggregation/related-person rules, updates cross-references, and eliminates several specialized credits/deductions—simplifying enforcement and leveling the playing field.
Middle‑class households and consumers may face higher fuel and energy prices because increased tax burdens on oil and gas producers can be passed through to retail prices.
Energy workers and communities in producing regions may see reduced investment and job losses as the bill removes/substantially reduces multiple incentives for fossil‑fuel production and development.
Owners of small oil/gas businesses, pass‑through entities, marginal wells, and working‑interest investors will pay higher taxes and face cash‑flow pressures because credits and favorable treatments (percentage depletion, QBI carveouts, passive‑loss exceptions, marginal‑well credits, etc.) are eliminated or limited.
Based on analysis of 12 sections of legislative text.
Removes multiple tax preferences for oil and gas producers (credits, depletion, deductions, LIFO, and 199A carve‑outs) and tightens foreign tax credit rules for oil income.
Eliminates a wide range of tax benefits for oil and gas producers by changing inventory rules, removing credits and deductions, narrowing depletion and passive‑loss exceptions, and expanding the definition of "crude oil." The bill prevents very large oil producers from using LIFO, repeals multiple oil and gas tax credits and special deductions, tightens foreign tax credit treatment for oil income, and disallows the 199A passthrough deduction for oil-related businesses. Most provisions take effect for taxable years beginning after December 31, 2024 (with a few definitional rules effective on enactment). The changes primarily target major integrated oil companies, oil and gas property owners, and related service and refining businesses; they will also affect investors, downstream businesses, and federal tax receipts.