DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part of the
legislative instrument. The keyword, one-liner, abstract, and digest do not constitute part of the law
or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 259 Engrossed 2024 Regular Session Beaullieu
Abstract: Reduces the severance tax rate on oil over an eight-year period from 12.5% to 8.5% of
its value at the time and place of severance and fixes the severance tax rate for oil produced
from certain incapable and stripper wells at the current rate.
Present law provides for the levy of a tax on natural resources severed from the soil or water, the rate
for which is predicated on the quantity or value of the products or resources severed.
Present law provides that the tax rate on oil is 12.5% of its value at the time and place of severance.
Provides that the value of the oil is the higher of the gross receipts received from the first purchaser,
less charges for trucking, barging and pipeline fees, or the posted field price.
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, 2025, and before July 1, 2026, to 12%.
(2)For taxable periods beginning on or after July 1, 2026, and before July 1, 2027, to 11.5%.
(3)For taxable periods beginning on or after July 1, 2027, and before July 1, 2028, to 11%.
(4)For taxable periods beginning on or after July 1, 2028, and before July 1, 2029, to 10.5%.
(5)For taxable periods beginning on or after July 1, 2029, and before July 1, 2030, to 10%.
(6)For taxable periods beginning on or after July 1, 2030, and before July 1, 2031, to 9.5%.
(7)For taxable periods beginning on or after July 1, 2031, and before July 1, 2032, to 9%.
(8)For taxable periods beginning on or after July 1, 2032, to 8.5%.
Present law provides that oil produced from a well classified by the commissioner of conservation
(commissioner) as an oil well and determined by the Dept. of Revenue (DOR) as a well that is
incapable of producing an average of more than 25 barrels of oil per producing day during the entire
taxable month, and which also produces at least 50% salt water per day is taxed at a rate equal to
one-half of the present rate for oil established in present law (R.S. 47:633(7)(a) which equates to
6.25%). Further defines such a well for severance tax purposes as an incapable well if the well has
been certified by DOR as incapable of production on or before the 25th day of the second month following the month of production.
Proposed law changes present law by fixing the rate at 6.25% of the oil's value at the time and place
of severance.
Present law provides that oil produced from a well classified by the commissioner as an oil well and
certified by DOR that the well is incapable of producing an average of more than 10 barrels of oil
per producing day during the entire taxable month is taxed at a rate equal to one-quarter of the
present rate for oil established in present law (R.S. 47:633(7)(a) which equates to 3.125%). Further
defines such a well for severance tax purposes as a stripper well if the well has been certified by
DOR as a stripper well on or before the 25th day of the second month following the month of
production.
Proposed law changes present law by fixing the rate at 3.125% of the oil's value at the time and place
of severance.
Present law provides that oil produced from a well in a stripper field classified by the commissioner
as a mining and horizontal drilling project which utilizes gravity drainage to a collection in a
downhole operations room is taxed at a rate equal to one-quarter of the present rate for oil
established in present law (R.S. 47:633(7)(a) which equates to 3.125%). Further defines such a well
for severance tax purposes as such if the well has been classified by the commissioner as a mining
and horizontal drilling project before the lower rate is claimed on a tax return.
Proposed law changes present law by fixing the rate at 3.125% of the oil's value at the time and place
of severance.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 47:633(7)(a), (b), and (c)(i)(aa) and (ii)(aa) and (cc))