Natural gas taxes are primarily paid by a producer. Depending on the contract between producer and purchaser, both parties can agree that a purchaser will pay the natural gas taxes.
Monthly on the 20th day of the 2nd month following the production month (for example, April 20 for February activity) OR yearly, if qualified, on February 20 for the preceding year.
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.
To ensure crude oil and natural gas taxpayers have access to qualified credits as quickly as possible, the Comptroller's office will refund credits generated after Jan. 1, 2014, upon verification. Learn more.
Get instructions and examples for reporting a low-producing well exemption.
A reduced tax rate can apply if a well qualifies for an exemption that was certified by the Texas Railroad Commission. Certified exemptions and their reduced tax rates are:
When an oil or gas well qualifies for multiple severance tax incentives, a taxpayer can choose which incentive is most favorable. For example, some gas wells now qualify for the low-producing well and high-cost gas tax incentives at the same time. Depending on the average price of gas, the low-producing well tax incentive can be lower than the high-cost gas reduced tax rate. Other months, the high-cost gas incentive might be more favorable.
A taxpayer can choose the tax incentive that has a lower tax rate for a gas well for each individual report period, but cannot report both for the same gas well for the same report period.
The Railroad Commission of Texas (RRC) considers the protection of the environment one of its primary responsibilities; however, releases of casinghead gas resulting from oil production are unavoidable.
Title 16, Texas Administrative Code, Statewide Rule 3.32 (SWR 32) allows operators to vent or flare casinghead gas while drilling an oil well, up to 10 days after a well’s completion.
The RRC requires a permit for venting or flaring of casinghead gas from oil wells pursuant to SWR 32. Operators must:
In accordance with Tax Code, Section 201.053, the volume of the casinghead gas from an oil well is not taxable provided the casinghead gas was lawfully vented or flared under SWR 32. The RRC permits venting or flaring for a specific length of time.
Tax Code, Section 201.058 allows permitted operators to increase their production by marketing gas from an RRC certified oil well or lease for which gas was released into the air for 12 months or more. If certified, the operators of these oil wells are entitled to a 100% tax exemption on the production resulting from the marketing of such gas for the life of the well or lease.
The tax exemption begins on the start date indicated on the RRC certification letter and ends when the well is no longer active.
Taxpayers are required to:
Taxpayers are required to:
Taxpayers receive an approval letter from Comptroller’s office for the tax exemption.
This fee is based upon the volume reported on line 16 (“Your Volume”) for report periods September 2003 and after.
If a taxpayer paid tax prior to approval of the exemption, it must file an amended report within four-years from the due date of a filing period to receive a refund.
Effective April 27, 2015, the Comptroller's office eliminated all reported error messages considered noncritical. This means error messages labeled noncritical will no longer be displayed on the Crude Oil and Natural Gas Web Inquiry System, making it easier for taxpayers to review and correct all critical errors.
In 2015, the Texas Legislature passed House Bill 855, which requires state agencies to publish a list of the three most commonly used Web browsers on their websites. The Texas Comptroller’s most commonly used Web browsers are Google Chrome, Microsoft Internet Explorer and Apple Safari.