taxes

Crude Oil Production Tax

Who is responsible for this tax?

The first purchaser of crude oil in Texas must pay tax based on crude oil’s market value.

Rates

  • Oil production tax: 4.6 percent (.046) of market value of oil
  • For report periods September 2015 and later, the taxable barrels are subject to the Oil Field Clean-Up Fee of $0.00625 (5/8 of a cent) per barrel
  • For report periods September 2001 through August 2015, the taxable barrels are subject to the Regulatory Tax and Oil Field Clean-Up Fee amounts of .008125 (3/16 of a cent ($.001875) per barrel + 5/8 of a cent ($0.00625) per barrel)
  • Reduced oil production tax rates for certified exemptions:
    • Enhanced Oil Recovery Exemption (EOR): 2.3 percent (.023) of market value of oil
    • Tax exemption for enhanced recovery projects using anthropogenic carbon dioxide: Up to an additional 50 percent reduction in the tax rate applies if in the recovery of the oil, the enhanced recovery project uses carbon dioxide that:
      1. is captured from an anthropogenic source in this state;
      2. would otherwise be released into the atmosphere as industrial emissions;
      3. is measurable at the source of capture; and
      4. is sequestered in one or more geological formations in this state following the enhanced oil recovery process.
    • Two-Year Inactive Well Exemption: 0.0 percent (.000) of market value of oil

Due Date

Monthly: 25th day of the month following the production month (for example, April 25 for March production).

Penalties and Interest

Penalties
  • If tax is paid 1-30 days after the due date, a 5 percent penalty is assessed.
  • If tax is paid over 30 days after the due date, a 10 percent penalty is assessed.
Interest
  • Past due taxes are charged interest beginning 61 days after the due date.
  • To calculate interest on past due taxes, visit Interest Owed and Earned.

Reporting and Payment Requirements

Select the amount of taxes you paid in the preceding state fiscal year (Sept. 1 – Aug. 31) to find the reporting and payment methods to use.

Less than $10,000

Select one of these reporting methods:

Select one of these payment methods:

$10,000 - $49,999

Select one of these reporting methods:

Select one of these payment methods:

$50,000 - $499,999

Electronic Data Interchange (EDI) is the only available reporting method.

Select one of these payment methods:

$500,000 or more

Electronic Data Interchange (EDI) is the only available reporting method.

Select one of these payment methods:

Reporting Requirements for Multiple Exemption Types – Effective April 29, 2019

Taxpayers are required to report project numbers for corresponding leases involving tax exemptions or enhanced oil recovery (EOR) projects and EOR projects using anthropogenic carbon dioxide.

Reporting Multiple Exemptions in a Single Lease Transaction

Taxpayers can report multiple Exempt Types in a single lease transaction. The eligible Exempt Types include:

  • EOR projects (Exempt Type 05);
  • Low-producing oil lease (Exempt Type 11); and
  • EOR project using Anthropogenic Carbon Dioxide (Exempt Type 14).
Exempt Type Reporting Requirements
Type 11 Continue to reduce the “Net Taxable Value” field by the appropriate percentage.
Type 05 and 14 Report a valid project number. If the project number is not reported, the tax exemption is disallowed.
Type 05 and/or 14
  • Report these Exempt Types with the appropriate reduced tax rate to calculate the tax due amount.
  • The tax due amounts for Exempt Types 05 and 14 reported on the “Lease Detail Supplement” pages are totaled, and that total is reported on a separate line on the “Totals/Summary” page.

The Comptroller’s office will automatically apply the tax credit for report periods of February through June 2016, for an Exempt Type 11 lease if amended reports were filed for previously-approved Exempt Type 05 leases.

The Comptroller’s office will not apply the tax credit for report periods of February through June 2016, for an Exempt Type 11 lease if the lease has not been approved as an Exempt Type 11 lease and amended reports have not been filed by April 26, 2019 for previously-approved Exempt Type 05 leases.

For assistance, contact our office at 800-531-5441, ext. 3-4455.

Additional Resources