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Oil & Gas Tax

Oil & Gas Production Tax Title 9, Chapter 17 Sections 25-35

Tax Rate Description
1% Production from wells permitted from 7/01/96 thru 6/30/2002 for five years from first production.
1.66% Gross proceeds from offshore production from depths greater than 8,000 feet below mean sea level.
2% All other production.

Oil & Gas Reduced Privilege Tax Title 40, Chapter 20 Article 1, Section 2(a)(6)

Tax Rate Description
2% Wells normally qualifying for the 4% privilege tax rate and permitted from 7/01/96 thru 7/01/2002 for five years from first production
3% Wells normally qualifying for the 6% privilege tax rate and permitted from 7/01/96 thru 7/01/2002 for five years from first production

Oil & Gas Privilege Tax Title 40, Chapter 20 Article 1 & 1a, Sections 2 & 21, Respectively

Tax Rate Description
4%
  • Offshore wells producing 200 MCF or 25 BBLs or less per day at depths less than 8,000 feet.
  • Oil wells producing 25 BBLs or less per day.
  • Gas wells producing 200 MCF or less per day.
  • Incremental production from qualified enhanced recovery projects and supplemental enhanced recovery projects approved by the State Oil and Gas Board.
3.65% Gross proceeds from offshore production from depths greater than 8,000 feet below mean sea level.
6%
  • Offshore wells producing greater than 200 MCF or 25 BBls per day at depths less than 8,000 feet.
  • Wells permitted 7/01/88 or later.
8% All other taxable production.

Resources

E-File & E-Pay Your Taxes Online

Visit Oil & Gas Severance Tax FAQ

Questions

Alabama Department of Revenue
Business & License Tax Division
Severance Taxes
P.O. Box 327560
Montgomery, AL 36132-7560
Phone:  334-242-9612
Fax:  334-353-1809