The rules that actually change what you keep — severance tax, whether the state taxes your interest as property, and whether a dormancy statute can take it — side by side across all 28 states we buy in. Every figure links to the issuing agency or the statute.
Quick answer — How do mineral rights rules differ from state to state?
Severance tax comes off production before your check is cut. Watch the units — some states tax a percentage of value, others a flat amount per barrel or per MCF, which behaves very differently when prices move.
Property tax is the one owners forget. "Exempt" generally means the production tax is in lieu of it. "Assessed" means a county bill arrives every year, even on a small interest.
Royalty if you don't lease is the statutory floor — the worst case for an owner who never signs a lease and is force-pooled into a well. It is not what a negotiated lease pays. In almost every state, your oil & gas royalty is set by your lease — not by statute. There is no government-set royalty rate for privately negotiated leases. Across the U.S., negotiated oil & gas leases have historically run from 1/8 (12.5%) at the low end to 1/4 (25%) in the most competitive plays, with 3/16 (18.75%) and 1/5 (20%) common in active basins. Your actual rate depends on the play, the operator, the competition for your acreage, and when you signed — not on any state rate.
Dormancy is the only row that can cost you the asset itself. The period matters less than the mechanism — a self-executing statute needs no lawsuit and gives no notice.
Legal description and regulator determine how your tract is identified and where corroborating records live.
The full reference table. Every state name links to its detailed page, and every statute citation links to the issuing source.
| State | Royalty if you don't lease | Severance — oil | Severance — gas | Property tax | Dormancy | Legal description |
|---|---|---|---|---|---|---|
| Alabama | 3/16 (18.75%) | ≈8% (6% + 2%) | ≈8% (6% + 2%) | Exempt | NoneNo use-it-or-lose-it statute — the interest does not lapse from inactivity | Sections; two meridians |
| Alaska | No forced pooling | 5% (landowner royalty) | 1.667% (landowner royalty) | Exempt | Not establishedOur research did not confirm a dormancy statute either way for this state, so we do not state one. | Sections; large unsurveyed areas |
| Arkansas | 1/8 (12.5%) | 5% (4% ≤10 bbl/d) | 5% / 1.5% / 1.25% by class | Assessed | NoneNo use-it-or-lose-it statute — the interest does not lapse from inactivity | Section-township-range |
| California | Set by pooling order | None — operator assessment | None — operator assessment | Assessed | 20 yearsCourt action required | Sections + Spanish ranchos |
| Colorado | 13% (gas) / 16% (oil) | 2–5% graduated | 2–5% graduated | Assessed | NoneNo use-it-or-lose-it statute — the interest does not lapse from inactivity | Section-township-range |
| Florida | Set by pooling order | 8% (5% small wells) | $0.203/MCF | Special case | ConditionalRuns from the root of title, not from last activity | Section-township-range |
| Illinois | 1/8 (12.5%) | None (fractured wells only) | None (fractured wells only) | Assessed | ConditionalOnly reaches owners who cannot be found | Section-township-range |
| Indiana | Set by pooling order | Greater of 1% or $0.24/bbl | Greater of 1% or $0.03/Mcf | Assessed | 20 yearsSelf-executing — no lawsuit, no notice | Section-township-range |
| Kansas | 1/8 (12.5%) — compulsory unitization only | 8% less 3.67% credit (4.33%) | 8% less 3.67% credit (4.33%) | Assessed | 20 yearsNotice + 60-day cure | Section-township-range |
| Kentucky | 1/8 (12.5%) | 4.5% | 4.5% | Assessed | NoneNo use-it-or-lose-it statute — the interest does not lapse from inactivity | Metes & bounds |
| Louisiana | Cost-bearing share | 6.5% (12.5% pre-7/2025 wells) | 15.14¢/MCF | Exempt | 10 yearsSelf-executing — no lawsuit, no notice | Parishes; sections + arpent lots |
| Michigan | Set by pooling order | 6.6% | 5% | Exempt | 20 yearsSelf-executing — no lawsuit, no notice | Section-township-range |
| Mississippi | Cost-bearing share | 6% | 6% | Exempt | NoneNo use-it-or-lose-it statute — the interest does not lapse from inactivity | Sections; five meridians |
| Montana | 1/8 (12.5%) | 15.10% (royalty) | 15.10% (royalty) | Exempt | NoneNo use-it-or-lose-it statute — the interest does not lapse from inactivity | Section-township-range |
| Nebraska | 1/8 (12.5%) | 3% (2% stripper) | 3% | Assessed | 23 yearsCourt action required | Section-township-range |
| New Mexico | 1/8 (12.5%) | ≈8.27% all-in (5 taxes) | ≈8.97% all-in (5 taxes) | Special case | NoneNo use-it-or-lose-it statute — the interest does not lapse from inactivity | Section-township-range |
| New York | 1/8 (12.5%) — lowest lease in the unit, never less than 1/8 | None | None | Special case | Not establishedOur research did not confirm a dormancy statute either way for this state, so we do not state one. | Metes & bounds |
| North Dakota | Unit average lease royalty, or 16% (operator's election) | 10% (5% gross + 5% extraction) | $0.0655/MCF | Exempt | 20 yearsNotice + 60-day cure | Section-township-range |
| Ohio | Set by pooling order | 10¢ per barrel | 2.5¢ per MCF | Assessed | 20 yearsNotice + 60-day cure | Patchwork; usually metes & bounds |
| Oklahoma | 1/8 (12.5%) | 7% (5% first 36 mo) | 7% (5% first 36 mo) | Exempt | NoneNo use-it-or-lose-it statute — the interest does not lapse from inactivity | Section-township-range |
| Pennsylvania | No forced pooling | None | None — per-well impact fee | Exempt | No owner deadlineUnknown owners go into a court-supervised trust; title is preserved | Metes & bounds, by warrantee |
| South Dakota | 1/8 (12.5%) | 4.5% | 4.5% | Assessed | 23 yearsSelf-executing — no lawsuit, no notice | Section-township-range |
| Tennessee | Set by pooling order | 3% | 3% | Assessed | 20 yearsCourt action required | Metes & bounds |
| Texas | No forced pooling | 4.6% of market value | 7.5% of market value | Assessed | NoneNo use-it-or-lose-it statute — the interest does not lapse from inactivity | Survey & abstract |
| Utah | Unit's average weighted landowner royalty | 3% / 5% price-tiered | 3% / 5% price-tiered | Assessed | NoneNo use-it-or-lose-it statute — the interest does not lapse from inactivity | Section-township-range |
| Virginia | 1/8 (12.5%) — escrowed for CBM ownership disputes only | None — local up to 1%+1% | None — local up to 1%+1% | Assessed | ConditionalA 35-year presumption that excludes the gas counties | Metes & bounds |
| West Virginia | Highest royalty paid to any consenting cotenant in the same property | 5% | 5% | Assessed | NoneNo use-it-or-lose-it statute — the interest does not lapse from inactivity | Metes & bounds |
| Wyoming | 16%, or the unit average if higher | 6% | 6% | Assessed | NoneNo use-it-or-lose-it statute — the interest does not lapse from inactivity | Section-township-range |
Many owners do, and the administrative load compounds — different tax bills, different filing duties, different dormancy clocks. Buckhead Energy buys across all 28 of these states and will make a free, no-obligation written offer on one interest or all of them.
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There is no single best state — the rules trade off against each other. Pennsylvania has no severance tax and no county property tax on the interest, but takes the heaviest post-production deductions. Montana charges royalty owners a flat 15.10% with no incentive rates but no separate county bill. Texas assesses producing minerals as property but has no dormancy statute at all. What matters is the combination that applies to your specific interest.
Michigan, Indiana, and South Dakota are self-executing — title vests in the surface owner by operation of law with no lawsuit and no individual notice. Louisiana extinguishes a servitude or royalty by prescription after just ten years. North Dakota, Kansas, and Ohio lapse after twenty years but require notice and give a sixty-day cure window. Tennessee, Nebraska, and California require a court action. Twelve of the states we buy in have no dormancy statute at all.
Montana is the harshest for royalty owners specifically — a flat 15.10% with every incentive rate reserved for working interests. North Dakota stacks two taxes on oil for 10% combined. New Mexico stacks five separate production taxes for roughly 8.27% on oil and 8.97% on gas. At the other end, Pennsylvania has no severance tax at all, and most Illinois production is untaxed because the state only taxes high-volume fractured wells.
No, and this is one of the biggest differences between them. Texas, Kansas, West Virginia, Colorado, and others assess producing interests and bill royalty owners directly. Oklahoma, North Dakota, Michigan, Montana, and Louisiana treat their production tax as being in lieu of property tax, so no separate county bill arrives. Alabama and Mississippi exempt mineral interests outright — Alabama exempts non-producing interests too.
No. It is a published reference. Every rate and statutory rule shown links to the issuing agency or the statute text, and each state page carries the verification date. Rules change by legislative action and several depend on facts specific to your interest. Consult a qualified oil and gas attorney and a CPA before acting.
This comparison is educational and is not legal, tax, or financial advice. Rates and statutory rules are quoted from the linked issuing agency or statute as of the verification date shown on each state page, and change by legislative action. Several rules turn on facts specific to your interest. Consult a qualified oil & gas attorney and a CPA before acting. Dormancy is shown as "not established" for New York and Alaska because our research did not confirm the position either way — we would rather say so than guess.
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