Fact Check: Severance Tax Proposal Would be Highest in US
SB 1155 would impose a severance tax rate of 39 cents per MCF. At the August estimated average wellhead price of $4.22 per MCF, this is an effective tax rate of 9.22%. This would be the highest severance tax in the nation.
|Severance Tax for Top Natural Gas Producing States
|Top Natural Gas Producing States||State||Severance Tax on Natural Gas||Severance Tax Exemptions and Incentives for Unconventional Wells||Top Corporate Net Income Tax||State & Local Tax Burden As a Percentage of State Income (Rank)|
|1||Texas||7.5% of market value||Rate reduction appr. 2% for up to 10 years||0.00%||8.4% (43)|
|2||Wyoming||6% of taxable value (gross sales minus certain processing and transportation costs)||Gas transportation costs are significant and are subtracted from the taxable value||0.00%||7.0% (48)|
|3||Oklahoma||7% plus 0.095% excise tax||Exempt from severance tax for four years or until gas production pays for the cost of the well||6.00%||9.8% (19)|
|4||New Mexico||3.75%||7.60%||8.6% (39)|
|5||Louisiana||$0.03 - 0.13 per MCF||Severance tax suspension on horizontally drilled well for 2 years or until payback||8.00%||8.4% (42)|
|6||Colorado||2% to 5% based on gross income||Allows producers to deduct 87.5% of their property taxes paid to gov. from severance tax to state.||4.63%||9.0% (34)|
|7||Alaska||25% to 50% net value||Reduction for all drilling in Cook Inlet basin and when gas is used instate; result minimal tax (appr. 1%). State also gives certain tax credits for exploration||6.50%||6.4% (50)|
|8||Utah||3% - 5%||6 months exemption for development wells||5.00%||9.6% (22)|
|9||Kansas||8% on gross value severed from earth||There is 3.67% tax credit for ad valorem taxes paid, effectively reducing the severance tax to 4.33%||7.05%||9.6% (21)|
|10||California||Less than 0.01 per mcf||8.84%||10.5% (6)|
|11||Alabama||4-8% of gross value||6.50%||8.6% (38)|
|12||Arkansas||5%||1.5% on new discovery wells for 24 months and on high cost wells for 36 months (can get extension)||6.50%||10.0% (14)|
|14||West Virginia||5% plus $0.047 per MCF||8.50%||9.3% (29)|
|15||Pennsylvania||No Tax||9.99%||10.2% (11)|
Read all of the Natural Gas: Myths & Facts at EnergyFactsPA.com.
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