Oklahoma Oil and Gas Industry Taxation | Oklahoma Oil & Gas Association

Oklahoma Oil and Gas Industry Taxation

Recent Legislative changes will give Oklahoma one of the highest tax rates for oil and natural gas companies, according to an economic study released Monday.

Mark Snead, president of RegionTrack, authored “Oklahoma Oil and Gas Industry Taxation,” which compares the effective tax rates in Oklahoma and 15 other major energy production states.

Previous evaluations of the oil and gas tax burden often failed to consider the two largest sources of state government revenue – personal income taxes and sales taxes. Those studies were typically restricted to ad valorem and severance taxes, known as the gross production tax (GPT) in Oklahoma. The new study incorporates all four of those measures to provide a more accurate comparison of the tax burden on energy companies.

Snead revealed his key findings at a state Capitol Energy Summit hosted by Sen. Mark Allen:

  • In the current fiscal year, Oklahoma ranks fifth in overall effective tax rate among the major energy producing states, based on the four taxes examined in the report
  • Proposals to raise the GPT to 4 percent would place Oklahoma third highest for overall tax rate; going to 7 percent would place Oklahoma second highest

“The report illustrates how important it is to look at the overall tax structure in the other major energy-producing states,” Snead said. “Studies which look at just ad valorem and GPT taxes fail to capture Oklahoma’s heavy reliance on sales and personal income taxes to fund state and local government. A broader view suggests Oklahoma is a not a low-tax state for oil and natural gas production.”