Louisiana House Bill 30 Proposes Severance Rate Reduction For Oil
LA HB30 was prefiled on February 25, 2021. This Bill proposes several changes to the oil severance tax – it reduces the severance tax rate for oil over a certain period of time and fixes the severance tax rate for oil produced from certain wells at the current rate.
Proposed law reduces the tax rate on oil over an eight-year period from 12.5% as follows:
(1) For taxable periods beginning on or after July 1, 2022, and before July 1, 2023, to 12%.
(2) For taxable periods beginning on or after July 1, 2023, and before July 1, 2024, to 11.5%.
(3) For taxable periods beginning on or after July 1, 2024, and before July 1, 2025, to 11%.
(4) For taxable periods beginning on or after July 1, 2025, and before July 1, 2026, to 10.5%.
(5) For taxable periods beginning on or after July 1, 2026, and before July 1, 2027, to 10%.
(6) For taxable periods beginning on or after July 1, 2027, and before July 1, 2028, to 9.5%.
(7) For taxable periods beginning on or after July 1, 2028, and before July 1, 2029, to 9%.
(8) For taxable periods beginning on or after July 1, 2029, to 8.5%.
Second, it sets the severance tax rate for oil produced from a well incapable of producing an average of more than 25 barrels of oil per producing day during the taxable month, and which also produces at least 50% salt water per producing day, to 6.25%.
Third, it sets the severance tax rate for oil produced from a well that is incapable of producing an average of more than 10 barrels of oil per producing day during the taxable month to 3.125%.
Fourth, it sets the severance tax rate for oil produced from a well in a stripper field to 3.125%.
Disclaimer: The purpose of this article is to make you aware of certain, potential rule changes. Laws are subject to change and interpretation. Please see official correspondence for official guidance.
