GREEN SHEET REDIGEST
HB 418 2024 Regular Session Beaullieu
TAX/SEVERANCE TAX: Reduces severance tax rates on oil and gas produced from
inactive wells and orphan wells
DIGEST
Present law provides for the levy of a tax, known as severance tax, on natural resources
severed from the soil or water. Provides that the rate of the severance tax is predicated on
the quantity or value of the products or resources severed.
Present law establishes general severance tax rates. Proposed law retains present law.
Present law provides for special, reduced rates of severance tax on production from oil and
gas wells with inactive or orphan well status conferred by the Dept. of Energy and Natural
Resources. Provides that the special rates shall be as follows:
(1)Production from an oil or gas well subsequent to the well's having been inactive for
two or more years, or having 30 days or less of production during the past two years,
shall be subject to a severance tax rate equal to 50% of the general severance tax rate
imposed by present law for a period of ten years.
(2)Production from an oil or gas well subsequent to the well's having been designated
as an orphan well for longer than 60 months shall be subject to a severance tax rate
equal to 25% of the general severance tax rate imposed by present law for a period
of ten years.
Proposed law lowers the special rate on production from an oil or gas well subsequent to the
well's having been inactive for two or more years, or having 30 days or less of production
during the past two years, from 50% of the general severance tax rate to 25% of that rate.
Proposed law lowers the special rate on production from an oil or gas well subsequent to the
well's having been designated as an orphan well for longer than 60 months from 25% of the
general severance tax rate to 12.5% of that rate.
Proposed law retains the ten-year period for each special rate.
Applicable to taxable periods beginning on or after October 1, 2024, through September 30,
2028.
Effective Oct. 1, 2024.
(Amends R.S. 47:633(7)(c)(iv))
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Ways and Means to the
original bill:
1. Change the effective date of proposed law from July 1, 2024, to Oct. 1, 2024.
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Revenue and Fiscal Affairs
to the engrossed bill
1. Adds an applicability date for the reduced tax rate for tax periods beginning on
or after October 1, 2024, through September 30, 2028.
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Prepared by Danielle Clapinski. Page 2 of 2
Prepared by Danielle Clapinski.