TO AMEND THE METHOD OF VALUATION FOR MINERAL RIGHTS UNDER ARKANSAS CONSTITUTION, ARTICLE 16, § 5; AND TO CLARIFY THE METHOD OF VALUATION FOR OIL AND GAS WELL PRODUCTION EQUIPMENT.

New property-tax rules for mineral owners

For assessment years beginning January 1, 2025, Arkansas sets property-tax valuation rules for mineral interests and well equipment. County assessors must assess all producing mineral interests. Mineral rights and land are assessed separately when different people own them; recorded deeds provide notice of separate ownership. A tax sale of either interest does not change ownership of the other. Covered wells include producing unit wells and wells producing oil, natural gas, other hydrocarbons, or combinations of them. Production equipment includes all piping and equipment from the casing bottom through the tank battery’s sales valve or sales meter. Assessors treat this equipment as real property and value it at $1 per foot. Casing made unusable for production by a cement or mechanical plug is not taxed. For wells with prior-year production, increased average daily production counts as newly discovered property only when the increase comes entirely from a geologic layer not produced by that well in the prior year. Working-interest values use a uniform expense allowance per barrel of oil or 1,000 cubic feet of gas, regardless of average daily production. The allowance must reflect actual expenses as closely as practical. Income-based values use actual average Arkansas prices for those units from the immediately preceding calendar year. State formulas, tables, and guidance for county assessors must follow these rules. These rules set property values, not final tax bills; local tax rates also affect what owners pay.