Sponsors (16)
Introduced January 14, 2025 by Sean Casten · Last progress January 14, 2025
The bill generates federal revenue and tightens tax rules to close fossil-fuel preferences and profit-shifting loopholes, improving tax equity and administration, but it raises taxes and compliance burdens for oil-and-gas firms — which may be passed to consumers and hurt jobs and small operators in energy communities.
General taxpayers and the federal budget: The bill eliminates multiple oil-and-gas tax preferences and credits, increasing federal revenue available for public services and reducing certain tax expenditures.
Tax administrators and taxpayers with cross-border operations: The bill tightens related-party rules and gives Treasury clearer rulemaking authority to define 'specific economic benefit' and related-person ownership, helping close profit-shifting and aggregation loopholes.
Small-business owners (non-fossil) and general taxpayers: The bill preserves QBI relief for non-fossil businesses while removing fossil-fuel–targeted preferences, improving tax equity between fossil and non-fossil pass-through firms.
Middle-class families and everyday consumers: Higher taxes and removed credits for oil and gas firms across many provisions are likely to raise production costs that may be passed on as higher fuel and energy prices.
Energy workers, small oil-and-gas operators, and local communities: Loss of credits, depletion allowances, and the ability to offset losses may reduce investment, strain cash flow, and risk job losses or reduced local economic activity in energy-dependent areas.
Owners of oil-and-gas pass-through businesses and investors: Eliminating up to a 20% QBI deduction and other targeted preferences increases tax liability for many smaller firms and investors, creating near-term cash-flow stress.
Based on analysis of 12 sections of legislative text.
Eliminates multiple oil- and gas-specific tax preferences, bans LIFO for major integrated producers, limits foreign tax credits for certain oil payments, and disqualifies oil trades from the QBI deduction.
Bans the largest integrated oil companies from using the LIFO inventory method and removes or limits many tax breaks for oil and gas businesses. It tightens foreign tax credit rules for certain oil-related payments, shortens and ends some oil-related amortizations and credits, repeals percentage depletion and other industry tax preferences, removes an exception to passive-loss rules for oil working interests, and disqualifies oil- and gas-related trades from the qualified business income deduction. Most changes take effect for taxable years beginning after December 31, 2024 (with some changes effective on enactment or for property placed in service after that date). The bill creates new definitions and regulatory authority, sets transition and change-in-method rules for affected taxpayers, and directs Treasury to issue regulations for several provisions.