S. 4604: Protecting America’s Small Oil and Gas Producers and Rural Jobs Act
This bill, titled the Protecting America’s Small Oil and Gas Producers and Rural Jobs Act
, proposes changes to the tax code concerning oil and gas producers, particularly those classified as small producers. Below is a summary of the main provisions of the bill:
Modification of Percentage Depletion Rules
The bill aims to amend certain rules related to how small oil and gas producers can calculate their depletion allowance, which is a tax deduction that allows producers to account for the reduction of the product they extract over time.
New Applicable Percentage Calculation
- The bill introduces a new method for determining the applicable percentage used in calculating depletion. This percentage cannot exceed 25% and is derived from a base of 15% plus an additional percentage point for each dollar that a reference crude oil price exceeds $70.
- The reference price for crude oil will be established based on specific criteria outlined in the Internal Revenue Code.
Adjustment for Future Years
For tax years beginning after 2027, the bill also includes provisions for adjusting the $70 reference price using a factor based on the Producer Price Index (PPI), which accounts for inflation in the drilling sector.
Nonapplication of Taxable Income Limitation
The bill proposes eliminating certain limitations regarding taxable income for small producers. This means that for a portion of the depletion allowance, producers will not be limited by their taxable income, allowing them to benefit more from the depletion deduction.
Increased Depletable Oil Quantity
Another significant change is the increase in the amount of oil that can be classified as depletable from 1,000 barrels
to 2,000 barrels
. This revision aims to enhance the tax benefits available to small producers.
Effective Date
The changes proposed in this bill will apply to taxable years starting after December 31, 2026.
Relevant Companies
- XOM: ExxonMobil - As a major player in the oil industry, changes in tax deductions for small producers could impact competitive dynamics for smaller producers that benefit from these tax advantages.
- CVX: Chevron - Similar to ExxonMobil, Chevron may see shifts in the market as small producers gain more favorable tax treatment.
This is an AI-generated summary of the bill text. There may be mistakes.
Sponsors
3 bill sponsors
Actions
2 actions
| Date | Action |
|---|---|
| May. 20, 2026 | Introduced in Senate |
| May. 20, 2026 | Read twice and referred to the Committee on Finance. |
Corporate Lobbying
0 companies lobbying
None found.
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