Protecting America’s Small Oil and Gas Producers and Rural Jobs Act

Higher tax breaks for small oil producers

If enacted, owners of marginal oil and gas properties would be able to claim higher percentage depletion for those properties. The applicable percentage would start at 15% and would rise by 1 percentage point for each whole dollar the calendar year reference price for crude oil exceeds $70, capped at 25%. For taxable years beginning after 2027 the $70 comparator would be increased for inflation using a drilling PPI adjustment. The bill would also raise the depletable oil quantity from 1,000 barrels to 2,000 barrels. The usual taxable-income limits in section 613A(c)(6) and the second sentence of section 613(a) would not apply to the depletion amount calculated under this rule. These changes would apply to taxable years beginning after December 31, 2026.