Oil & Gas Severance Tax & Deductions by State Buckhead Energy ↗
StateSeverance / production taxPost-production ruleLeading authority
Texas (TX)Oil 4.6%, gas 7.5% of market valueAt-the-wellHeritage Resources v. NationsBank (Tex. 1996)
Oklahoma (OK)7% gross production tax (5% first 36 months on new wells)Marketable-productMittelstaedt v. Santa Fe Minerals (Okla. 1998)
New Mexico (NM)≈7–8% combined (severance 3.75% + school + conservation)Lease-dependent / unsettled
North Dakota (ND)Oil ≈10% (5% production + 5% extraction); gas volumetricMarketable-productBice v. Petro-Hunt (N.D. 2009)
Colorado (CO)Graduated 2–5% of gross income (ad valorem credit)Marketable-productRogers v. Westerman Farm (Colo. 2001)
Wyoming (WY)6% (oil & gas) plus local ad valoremMarketable-productFollows first-marketable-product rule
Kansas (KS)8% of gross value, less exemptions (+0.182% conservation)Marketable-product (modified)Fawcett v. Oil Producers (Kan. 2015)
Louisiana (LA)Oil 12.5% of value; gas annually-adjusted volumetricMarketable-leaningReasonable, proportionate costs only
Montana (MT)≈9% production tax (reduced first 12–18 months on new wells)Lease-dependent / unsettled
Utah (UT)3% to $13/bbl, 5% above (+0.2% conservation)Lease-dependent
Arkansas (AR)5% of market value (reduced for new/high-cost gas)Marketable-leaningHanna Oil & Gas v. Taylor (Ark. 1986)
Mississippi (MS)6% of valueMarketable-productPiney Woods Country Life School v. Shell (5th Cir. 1984)
West Virginia (WV)5% of gross valueMarketable-product (strict)Estate of Tawney v. Columbia Natural Resources (W. Va. 2006)
Ohio (OH)Volumetric (~$0.10/bbl oil, ~$0.025/Mcf gas)At-the-wellLutz v. Chesapeake Appalachia (Ohio 2016)
Pennsylvania (PA)No severance tax (per-well unconventional impact fee)At-the-wellKilmer v. Elexco Land Services (Pa. 2010)
Kentucky (KY)4.5% of market valueAt-the-wellGenerally at-the-well
Michigan (MI)Oil 6.6% (4% stripper), gas 5%At-the-wellSchroeder v. Terra Energy (Mich. App. 1997)
Illinois (IL)No oil & gas severance taxLease-dependent
Alabama (AL)6–8% production privilege tax (varies by well)Lease-dependent
Nebraska (NE)3% of value (2% stripper) +0.03% conservationLease-dependent
Indiana (IN)Greater of 1% of value or volumetric minimumLease-dependent
Tennessee (TN)3% of sale priceLease-dependent
California (CA)No severance tax (per-unit regulatory assessment)At-the-well (lease-dependent)
Alaska (AK)Net-profits production tax (~35% of net value)Net-based regime
Source: buckheadenergy.com/oil-gas-severance-tax-by-state · Data as of 2026-06-29 · DOI · CC BY 4.0