Issues & Initiatives | Oklahoma Oil & Gas Association

Issues & Initiatives

Gross Production Tax

Crude Oil and Natural Gas Apportionment


The gross production tax (GPT) in Oklahoma is a 7% tax on oil and gas production. The majority of this tax is distributed between the General Revenue Fund, the County Highway Fund and to the school districts in each county, based on average daily attendance per capita.  The graphs above demonstrate how the apportionment has changed from Fiscal Year 1999 to Fiscal Year 2014.

In 2014, with the support of the oil and gas industry, Governor Fallin signed HB 2562 into law. A lawsuit was filed stating the bill violated provisions in the state’s constitution, but the lawsuit was later withdrawn. The bill extended, reduced and simplified the gross production incentives. The bill extends the exemption period for deep wells between 12,500 to 14,999 feet in depth and new discovery wells until July 1, 2015. The bill provides a reduced 2 percent gross production tax rate on production from a new well spudded on or after July 1, 2015, for 36 months of production.  Thereafter, the standard 7 percent rate takes effect. The bill extends the exemption period for the following drilling incentives to July 1, 2020: secondary recovery projects, tertiary recovery projects, reestablished production from an inactive well, and production enhancement projects. It extends the exemption period for economically at-risk oil or gas leases to July 1, 2020.   

Our Gross Production Tax Committee meets when needed to address proposed legislation impacting tax incentives and deductions as well as tax reporting changes.   In 2014, the Oklahoma Tax Commission finalized their Gross Production Tax reporting changes which will be effective February 1, 2015.  The new reporting requirements will eliminate several data elements and summary tax reports.  It will also eliminate the OERB and Marginal well reports by adding them onto Form 300-C. 

Recent Articles:

Debate continues for state tax incentives on oil, gas production

Ad Valorem Tax (Property Tax)

An ad valorem tax is a tax based on the value of real estate or personal property.  The tax dollars raised are a large percentage of the revenue for the counties, schools, and cities across Oklahoma.  For the energy industry, there are a variety of assets that may be exempt from ad valorem taxes in lieu of gross production taxes. The distinction of what is taxable and at what value has historically been the basis for significant debate.  OKOGA has worked with the taxing authorities over the last several years to make positive changes in the Ad Valorem Tax System in Oklahoma to help resolve these issues and many others.  These efforts have helped not only the energy industry, but taxpayers of all classifications.