HR383-119

What This Bill Does

The End Oil and Gas Tax Subsidies Act is a fossil-fuel tax preference repeal package. It lengthens geological and geophysical expenditure amortization from 24 months to seven years and removes the special rule, repeals the marginal well production credit, repeals the enhanced oil recovery credit, bars intangible drilling and development cost expensing for oil and gas wells after 2024, repeals percentage depletion for oil and gas wells, repeals the tertiary injectant deduction, ends the working-interest exception to passive loss limits, denies the section 199A qualified business income deduction for production, refining, processing, transportation, or distribution of oil, gas, or primary products, prohibits major integrated oil companies from using LIFO inventory accounting, limits dual-capacity taxpayer foreign tax credits for combined foreign oil and gas income to amounts that would be taxes absent a specific economic benefit, and clarifies that crude oil for Oil Spill Liability Trust Fund excise-tax purposes includes condensates, natural gasoline, bitumen, tar sands oil, and oil shale products. Most provisions apply to taxable years beginning after December 31, 2024. The bill raises revenue and reduces preferential treatment for fossil fuel production, but it increases tax costs for oil and gas businesses.

Who Benefits and How

Federal taxpayers benefit from revenue raised by eliminating oil and gas credits, deductions, and accounting preferences. Oil Spill Liability Trust Fund programs benefit if tar sands and similar products are treated as crude oil for excise-tax purposes. Renewable energy developers benefit if fossil fuel competitors lose preferential tax treatment. Treasury tax staff benefit from clearer statutory treatment of oil and gas tax preferences.

Who Bears the Burden and How

Independent oil producers lose accelerated deductions, credits, depletion, passive-loss treatment, and qualified business income deductions. Marginal well operators lose the section 45I production credit. Major integrated oil companies lose LIFO accounting for inventory. Dual-capacity oil taxpayers lose foreign tax credit treatment for payments tied to specific economic benefits. Tar sands producers face crude-oil excise tax treatment for bitumen-derived oil. IRS energy tax staff must update guidance, forms, and enforcement for the repeals and new definitions.

Key Provisions

• Extends geological and geophysical expenditure amortization from 24 months to seven years.
• Repeals marginal well and enhanced oil recovery credits.
• Prohibits intangible drilling cost expensing for oil and gas wells after 2024.
• Repeals percentage depletion and tertiary injectant deductions for oil and gas.
• Repeals the working-interest passive-loss exception and denies section 199A deductions for oil and gas activities.
• Bars major integrated oil companies from using LIFO inventory accounting.
• Restricts foreign tax credits for dual-capacity oil and gas taxpayers.
• Clarifies tar sands, oil shale, bitumen, condensates, and natural gasoline as crude oil for excise-tax purposes.