# What the End Oil and Gas Tax Subsidies Act Actually Does

This bill eliminates a collection of tax breaks that the federal government currently gives to oil and gas companies. Think of it like removing special discounts that oil companies have been getting on their taxes for decades. Starting in 2025, these companies would have to follow the same basic tax rules as most other businesses.

Right now, oil and gas companies get to deduct certain expenses much faster than other industries, write off geological exploration costs quickly, claim credits for producing oil from older wells, and use accounting methods that let them defer taxes. They can also deduct costs for injecting chemicals to squeeze more oil out of the ground, and they get special treatment on something called "percentage depletion," which essentially lets them deduct a percentage of their revenue just for extracting oil and gas. The bill eliminates all of these advantages. For example, instead of writing off exploration costs in 24 months, companies would have to spread those deductions over 7 years like most other industries do. Large oil companies would also lose the ability to use a particular accounting method (called LIFO) that helps them reduce their tax bills when oil prices rise.

The bill also targets some more specific tax strategies. It prevents oil and gas companies from claiming a special deduction for business income that other industries can claim, removes an exception that lets oil and gas investors avoid certain "passive loss" limitations, and restricts how oil companies can claim foreign tax credits when operating internationally. Additionally, it clarifies that tar sands and oil shale products are subject to the existing oil spill tax.

If this bill becomes law, oil and gas companies would pay more in federal taxes because they'd lose these special tax advantages. This could potentially affect gas prices and energy costs, though economists disagree about how much. The bill's supporters argue it levels the playing field and directs more tax revenue toward the government, while opponents worry it could reduce investment in domestic energy production.

End Oil and Gas Tax Subsidies Act of 2025

Casten, Sean

End Oil and Gas Tax Subsidies Act of 2025This bill repeals or limits tax deductions and credits related to oil and gas production; increases the amortization period of geological and geophysical expenses; prohibits the use of the last-in, first-out (LIFO) accounting method by certain oil companies; and expands the definition of crude oil for certain purposes.The bill repeals the<ul><li>tax credits for producing oil and gas from marginal wells and enhanced oil recovery,</li><li>tax deduction for intangible drilling and development costs for oil and gas wells,</li><li>percentage depletion,</li><li>tax deduction for tertiary injectant expenses, and</li><li>exception to the passive loss limitations for working interests in oil and gas property.</li></ul>The bill increases the amortization period for geological and geophysical expenses from two years to seven years and prohibits major integrated oil companies from using the LIFO accounting method.The bill excludes from the qualified business income tax deduction items related to oil and gas production, refining, processing, transporting, and distribution.The bill provides statutory authority for Internal Revenue Service regulations that exclude from the definition of a tax for purposes of the foreign tax credit levies imposed by foreign countries or U.S. possessions on persons that receive a specific economic benefit from the country or possession.Finally, the bill defines crude oil for purposes of the excise tax on imported petroleum and crude oil to include bitumen or bituminous mixtures or oil derived from such mixtures (including tar sands) and oil derived from&nbsp;kerogen-bearing sources (including oil shale).