Protecting America’s Small Oil and Gas Producers and Rural Jobs Act
Sponsored By: Senator Marshall, Roger [R-KS]
Introduced
Summary
This bill would change how percentage depletion for oil and gas wells is calculated, tying the depletion rate to crude oil prices and adjusting which wells and amounts qualify for the deduction. It sets a sliding rate that starts at 15 percent and rises by 1 percentage point for each whole dollar the reference oil price is above $70, capped at 25 percent, and it indexes the $70 base to a drilling Producer Price Index after 2027.
Show full summary
- Oil and gas owners would see the percentage depletion rate vary with the annual reference crude price, rising from a 15 percent base up to a 25 percent cap when prices run higher. This changes how much taxable income operators can reduce each year.
- Smaller or lower-output wells are affected by a technical change to the depletable oil quantity formula that replaces 1,000 barrels with 2,000 barrels in the calculation. That alters the per-well depletion amount used in tax math.
- The bill also carves out part of the depletion allowance from certain other limits in the tax code by making specified rules in sections 613 and 613A inapplicable to the portion computed under the standard percentage rule. These changes apply to taxable years beginning after December 31, 2026, with the PPI indexing kicking in for years after 2027.
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Bill Overview
Analyzed Economic Effects
1 provisions identified: 1 benefits, 0 costs, 0 mixed.
Lower taxes for small oil producers
This bill would make percentage depletion more generous for oil and gas producers who claim it. You would use 2,000 barrels instead of 1,000 to compute the depletable oil quantity. The bill would set the "applicable percentage" at 15% plus 1 percentage point for each whole dollar that $70 is above the reference price for crude oil, capped at 25%. For tax years after 2027, the $70 base would be increased by a Producer Price Index adjustment based on the BLS drilling-wells index (12-month average ending Aug 31). The bill would also remove the taxable-income limit for the portion of the depletion allowance specified in the provision. These changes would apply to taxable years beginning after December 31, 2026.
Sponsors & CoSponsors
Sponsor
Marshall, Roger [R-KS]
KS • R
Cosponsors
Sen. Cassidy, Bill [R-LA]
LA • R
Sponsored 5/20/2026
Sen. Moran, Jerry [R-KS]
KS • R
Sponsored 5/20/2026
Sen. Lankford, James [R-OK]
OK • R
Sponsored 6/8/2026
Sen. Daines, Steve [R-MT]
MT • R
Sponsored 6/16/2026
Sen. Moreno, Bernie [R-OH]
OH • R
Sponsored 6/16/2026
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov