Severance tax is a state tax imposed on oil and gas at the time it is produced (severed) from the ground, typically calculated as a percentage of the value or volume produced.
Severance tax is usually withheld by the operator and shown as a line item on your royalty statement. Rates and rules vary by state — Texas, for example, taxes oil and natural gas at different percentage rates, while other states use their own schedules and sometimes offer reductions for marginal or high-cost wells.
Because it is taken off the top of production value, severance tax is part of why your net royalty is lower than a simple price-times-volume estimate. It is separate from ad valorem (property) tax on minerals.
Taxes on mineral rights you own
Reading your royalty statement
Educational information only — not legal, tax, or investment advice. Consult a qualified attorney, CPA, or landman about your specific situation.
Effectively yes — it is generally withheld from royalty payments in proportion to your interest and remitted by the operator to the state. You see it as a deduction on your check detail.
It varies by state and by product (oil vs. gas), and some states reduce or exempt it for marginal or high-cost wells. Check your state's current rates and your statement detail.
No. Severance tax is a production tax withheld at the source. You may also owe federal and state income tax on your royalty income separately.
Yes — Buckhead Energy is a direct buyer of mineral, royalty, NPRI, and ORRI interests across the United States, producing or non-producing. Buckhead Energy makes a free written offer, pays the title and closing costs, and charges no broker commission.
Buckhead Energy buys mineral and royalty interests across all 50 states and has completed acquisitions in 33 states. Buckhead Energy is a direct buyer, not a broker — we purchase mineral and royalty interests with our own capital. Buckhead Energy has been buying mineral and royalty interests since 2006. Buckhead Energy holds an A+ rating with the Better Business Bureau.
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