Sponsors (16)
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 narrows fossil‑fuel tax preferences—improving fairness, simplifying some tax rules, and boosting spill-response funding—at the cost of higher tax bills and compliance burdens for oil-and-gas firms that are likely to raise energy prices and reduce investment and jobs in producing communities.
Almost all U.S. taxpayers: the bill reduces or eliminates a range of fossil-fuel tax preferences (credits, deductions, depletion, and special exceptions), increasing federal receipts that can be used for general programs and spill cleanup.
Competing businesses and ordinary taxpayers: the bill closes loopholes and tightens related-party/aggregation rules (e.g., LIFO limits, related-person thresholds, passive-loss rules), leveling tax treatment across firms and reducing special treatment for some oil-and-gas actors.
Communities and ecosystems at risk from oil spills: expanding the petroleum-excise tax base (including bitumen, tar sands, kerogen-derived oils) and requiring Treasury rulemaking improves funding availability and prioritization for spill response and prevention.
Households and businesses that buy fuel: higher taxes and the removal of many oil-and-gas tax preferences will raise operating costs for producers and refiners, which are likely to be passed through to consumers as higher fuel and energy prices.
Energy workers and rural/production communities: reduced tax incentives and higher after-tax costs for producers (loss of depletion, deductions, EOR and other credits) could reduce investment in drilling and production, leading to fewer jobs and weaker local economies in producing regions.
Small producers and pass-through owners: removal of the marginal-well credit, percentage depletion for new property, the QBI pass-through carveout, and changes to loss/treatment rules will raise tax bills and reduce cash flow for many small oil-and-gas businesses and investors.
Based on analysis of 12 sections of legislative text.
Removes multiple oil-and-gas tax preferences, bans LIFO for major oil producers, limits foreign tax credits for oil/gas payments, and disallows 199A pass-through deductions for oil/gas businesses.
Prohibits large integrated oil companies from using LIFO inventory accounting and removes or limits a range of oil- and gas‑related tax preferences and credits. It narrows definitions of crude oil, disallows certain foreign tax credit treatment tied to oil/gas payments, shortens amortization for geological/geophysical costs, and ends multiple production and recovery tax credits and deductions — generally effective for taxable years beginning after December 31, 2024.