Sponsors (16)
The bill tightens and eliminates many fossil‑fuel tax preferences to raise federal revenue, simplify rules, and bolster spill-response funding and environmental coverage, while imposing higher tax burdens and transition/compliance costs on oil and gas firms that are likely to reduce investment and could raise energy prices for consumers.
All U.S. taxpayers: The bill reduces or eliminates a range of special tax preferences for oil and gas (credits, deductions, depletion, and pass-through benefits), which is likely to increase federal revenue available for public programs and reduce the deficit pressure.
Homeowners, coastal communities, and the environment: Expanding the petroleum-excise tax base (including bitumen, tar sands, kerogen-derived oils) increases funds dedicated to oil-spill liability and cleanup and helps prioritize higher-risk fuels for environmental protection.
General taxpayers and tax administration: Removing several specialized credits and deductions (e.g., marginal-well credit, certain tertiary injectant deductions, passive-loss exception) simplifies the tax code and reduces audit/administrative burdens for the IRS.
Households and businesses that buy fuel: Higher tax burdens on oil and gas firms (from removed deductions and credits) are likely to be at least partly passed through as higher fuel and energy prices for consumers.
Oil & gas producers, including many pass-through entities and small operators: The elimination or limitation of multiple tax benefits (percentage depletion, IDC deductibility, EOR credit, marginal-well credit, QBI deduction, etc.) will raise taxable income and federal tax bills for producers and owners.
Energy workers and producing-region communities: Reduced investment incentives and higher operating costs for fossil‑fuel firms could lead to lower drilling, slower development, job losses, and reduced local economic activity in oil- and gas-dependent areas.
Based on analysis of 12 sections of legislative text.
Removes multiple oil-and-gas tax preferences and deductions, restricts foreign tax credit treatment, bans LIFO for very large producers, and disallows the 199A deduction for oil-and-gas businesses.
Introduced January 14, 2025 by Sean Casten · Last progress January 14, 2025
Removes and restricts a wide set of federal tax preferences for oil and gas activity and large oil producers, and narrows certain deductions and credits beginning mostly for taxable years after December 31, 2024. It disallows the LIFO inventory method for very large integrated oil companies, limits foreign tax credit treatment for combined oil-and-gas country levies, broadens the statutory definition of crude oil, shortens amortization for geological/geophysical costs, and repeals several industry-specific tax credits and deductions. The bill also ends the passive-loss working-interest exception for oil and gas, eliminates the Section 199A qualified business income deduction for businesses engaged in oil and gas production/refining/transportation/distribution, and makes multiple conforming and technical Code changes. Transitional rules and phased-in adjustments apply in several places to smooth the tax accounting impact for affected taxpayers.