Oil & Gas Tax – Alabama Department of Revenue

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Privilege Tax On Production: Title 40, Chapter 20, Article 1, Sections 1-23
Conservation and Regulation of Production: Title 9, Chapter 17, Article 1, Sections 25-35
County Oil and Gas Severance Tax Trust Funds: Title 40, Chapter 20, Article 3, Section 50
Oil and gas severance tax payments and returns are due on or before the 15th day of the second month following the month of production.

Oil & Gas Production Tax Title 9, Chapter 17, Article 1, 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

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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