{"name":"Oil & Gas Severance Tax and Post-Production Deduction Rules by State","publisher":"Buckhead Energy","url":"https://www.buckheadenergy.com/oil-gas-severance-tax-by-state","license":"https://creativecommons.org/licenses/by/4.0/","dataAsOf":"2026-06-29","disclaimer":"General reference compiled from published state tax statutes and reported decisions. Headline rates exclude exemptions, incentives, conservation fees, and local ad valorem tax. Not tax or legal advice.","count":24,"states":[{"state":"Texas","abbr":"TX","severanceTax":"Oil 4.6%, gas 7.5% of market value","basis":"value","postProductionRule":"At-the-well","leadingAuthority":"Heritage Resources v. NationsBank (Tex. 1996)","notes":"Deductions generally allowed unless the lease expressly bars them."},{"state":"Oklahoma","abbr":"OK","severanceTax":"7% gross production tax (5% first 36 months on new wells)","basis":"value","postProductionRule":"Marketable-product","leadingAuthority":"Mittelstaedt v. Santa Fe Minerals (Okla. 1998)","notes":"Operator bears cost to make gas marketable; limited downstream deductions."},{"state":"New Mexico","abbr":"NM","severanceTax":"≈7–8% combined (severance 3.75% + school + conservation)","basis":"value","postProductionRule":"Lease-dependent / unsettled","leadingAuthority":"—","notes":"No controlling post-production rule; implied-covenant arguments lean owner-protective."},{"state":"North Dakota","abbr":"ND","severanceTax":"Oil ≈10% (5% production + 5% extraction); gas volumetric","basis":"value/volumetric","postProductionRule":"Marketable-product","leadingAuthority":"Bice v. Petro-Hunt (N.D. 2009)","notes":"Gas-rate volumetric tax adjusts annually."},{"state":"Colorado","abbr":"CO","severanceTax":"Graduated 2–5% of gross income (ad valorem credit)","basis":"value","postProductionRule":"Marketable-product","leadingAuthority":"Rogers v. Westerman Farm (Colo. 2001)","notes":"Costs to reach a marketable product fall on the operator."},{"state":"Wyoming","abbr":"WY","severanceTax":"6% (oil & gas) plus local ad valorem","basis":"value","postProductionRule":"Marketable-product","leadingAuthority":"Follows first-marketable-product rule","notes":"Operator bears cost to make production marketable."},{"state":"Kansas","abbr":"KS","severanceTax":"8% of gross value, less exemptions (+0.182% conservation)","basis":"value","postProductionRule":"Marketable-product (modified)","leadingAuthority":"Fawcett v. Oil Producers (Kan. 2015)","notes":"After gas is marketable at the well, reasonable downstream costs may be shared."},{"state":"Louisiana","abbr":"LA","severanceTax":"Oil 12.5% of value; gas annually-adjusted volumetric","basis":"value/volumetric","postProductionRule":"Marketable-leaning","leadingAuthority":"Reasonable, proportionate costs only","notes":"Owner-protective; only reasonable post-production costs deductible."},{"state":"Montana","abbr":"MT","severanceTax":"≈9% production tax (reduced first 12–18 months on new wells)","basis":"value","postProductionRule":"Lease-dependent / unsettled","leadingAuthority":"—","notes":"No single controlling post-production rule; the lease governs."},{"state":"Utah","abbr":"UT","severanceTax":"3% to $13/bbl, 5% above (+0.2% conservation)","basis":"value","postProductionRule":"Lease-dependent","leadingAuthority":"—","notes":"Deduction treatment turns on lease language."},{"state":"Arkansas","abbr":"AR","severanceTax":"5% of market value (reduced for new/high-cost gas)","basis":"value","postProductionRule":"Marketable-leaning","leadingAuthority":"Hanna Oil & Gas v. Taylor (Ark. 1986)","notes":"Royalty generally bears no post-production cost absent lease terms."},{"state":"Mississippi","abbr":"MS","severanceTax":"6% of value","basis":"value","postProductionRule":"Marketable-product","leadingAuthority":"Piney Woods Country Life School v. Shell (5th Cir. 1984)","notes":"Landmark marketable-product decision."},{"state":"West Virginia","abbr":"WV","severanceTax":"5% of gross value","basis":"value","postProductionRule":"Marketable-product (strict)","leadingAuthority":"Estate of Tawney v. Columbia Natural Resources (W. Va. 2006)","notes":"Deductions require explicit, specific lease language."},{"state":"Ohio","abbr":"OH","severanceTax":"Volumetric (~$0.10/bbl oil, ~$0.025/Mcf gas)","basis":"volumetric","postProductionRule":"At-the-well","leadingAuthority":"Lutz v. Chesapeake Appalachia (Ohio 2016)","notes":"At-the-well unless the lease provides otherwise."},{"state":"Pennsylvania","abbr":"PA","severanceTax":"No severance tax (per-well unconventional impact fee)","basis":"none","postProductionRule":"At-the-well","leadingAuthority":"Kilmer v. Elexco Land Services (Pa. 2010)","notes":"Net-back method permitted under the Guaranteed Minimum Royalty Act."},{"state":"Kentucky","abbr":"KY","severanceTax":"4.5% of market value","basis":"value","postProductionRule":"At-the-well","leadingAuthority":"Generally at-the-well","notes":"Deduction treatment turns on lease language."},{"state":"Michigan","abbr":"MI","severanceTax":"Oil 6.6% (4% stripper), gas 5%","basis":"value","postProductionRule":"At-the-well","leadingAuthority":"Schroeder v. Terra Energy (Mich. App. 1997)","notes":"Reasonable post-production costs deductible unless lease bars them."},{"state":"Illinois","abbr":"IL","severanceTax":"No oil & gas severance tax","basis":"none","postProductionRule":"Lease-dependent","leadingAuthority":"—","notes":"No state production/severance tax on oil & gas."},{"state":"Alabama","abbr":"AL","severanceTax":"6–8% production privilege tax (varies by well)","basis":"value","postProductionRule":"Lease-dependent","leadingAuthority":"—","notes":"Rate depends on well type/depth and date."},{"state":"Nebraska","abbr":"NE","severanceTax":"3% of value (2% stripper) +0.03% conservation","basis":"value","postProductionRule":"Lease-dependent","leadingAuthority":"—","notes":"Deduction treatment turns on lease language."},{"state":"Indiana","abbr":"IN","severanceTax":"Greater of 1% of value or volumetric minimum","basis":"value/volumetric","postProductionRule":"Lease-dependent","leadingAuthority":"—","notes":"Volumetric floor ≈$0.24/bbl oil, $0.03/Mcf gas."},{"state":"Tennessee","abbr":"TN","severanceTax":"3% of sale price","basis":"value","postProductionRule":"Lease-dependent","leadingAuthority":"—","notes":"Deduction treatment turns on lease language."},{"state":"California","abbr":"CA","severanceTax":"No severance tax (per-unit regulatory assessment)","basis":"none","postProductionRule":"At-the-well (lease-dependent)","leadingAuthority":"—","notes":"CalGEM assessment per barrel/Mcf in lieu of a severance tax."},{"state":"Alaska","abbr":"AK","severanceTax":"Net-profits production tax (~35% of net value)","basis":"net","postProductionRule":"Net-based regime","leadingAuthority":"—","notes":"Production tax is net-of-cost; not a simple gross rate."}]}