End Oil and Gas Tax Subsidies

Full Title:
End Oil and Gas Tax Subsidies Act of 2025

Summary#

This bill, the End Oil and Gas Tax Subsidies Act of 2025, would change many federal tax rules that apply to oil and gas producers. Key changes in the bill text include:

  • Extend amortization for geological and geophysical expenditures from a 24-month period to a 7-year period and remove a related paragraph. Effective for amounts paid or incurred in taxable years beginning after December 31, 2024.
  • Repeal the tax credit for producing oil and gas from marginal wells (section 45I). Effective for taxable years after December 31, 2024.
  • Repeal the enhanced oil recovery credit (section 43). Effective for taxable years after December 31, 2024.
  • Prevent taxpayers from treating intangible drilling and development costs (IDCs) for oil and gas wells as capitalizable under section 263(c) after December 31, 2024.
  • Repeal percentage depletion for oil and gas wells (section 613A) for property placed in service after December 31, 2024, with several conforming changes to other tax code sections.
  • Repeal the deduction for tertiary injectants (section 193). Effective for taxable years after December 31, 2024.
  • End the exception that treats working interests in oil and gas properties as nonpassive for passive loss limits for taxable years beginning after December 31, 2024.
  • Disallow the qualified business income (QBI) deduction for income from production, refining, processing, transportation, or distribution of oil and gas for taxable years after December 31, 2024.
  • Prohibit major integrated oil companies that meet specified production, receipts, and refinery-run thresholds from using last-in, first-out (LIFO) inventory accounting for taxable years after December 31, 2024. The bill defines "major integrated oil company" and includes transition rules for changes in accounting method.
  • Add a special rule to the foreign tax credit rules for "dual capacity taxpayers" that limits claiming certain payments to foreign countries as taxes for combined foreign oil and gas income, for taxes paid in taxable years after December 31, 2024.
  • Clarify that tar sands and certain bituminous mixtures are treated as crude oil for excise tax purposes and give the Treasury regulatory authority to classify other fuel feedstocks or petroleum products as taxable if certain conditions are met. This clarification takes effect on the date of enactment. The bill was introduced in the House on January 14, 2025, sponsored by Representatives including Sean Casten and others, and was referred to the House Committee on Ways and Means.

What it means for you#

  • The bill changes tax rules that apply mainly to oil and gas businesses and to certain accounting and credit practices used by large oil companies.
  • Specific items removed or limited include marginal well and enhanced recovery credits, percentage depletion, the IDC capitalization rule for oil and gas wells, the tertiary injectants deduction, and the QBI deduction for oil and gas activities.
  • Major integrated oil companies meeting the bill's size tests could no longer use LIFO inventory accounting.
  • Tar sands would be explicitly treated as crude oil for excise tax purposes.
  • No detailed information in the bill text or metadata about how these changes would affect individual taxpayers, consumer prices, employment, or state and local finances.

Expenses#

No publicly available information on estimated budgetary effects, cost, or savings is included in the bill text or the provided metadata.

Proponents' View#

No publicly available information in the bill text or provided metadata stating proponents' arguments or rationale.

Opponents' View#

No publicly available information in the bill text or provided metadata stating opponents' arguments or concerns.