• Energy Tax Facts
  • 21 Dec 17

Tax Reform Legislation Passes Congress, Prioritizes American Energy

This week, the U.S. Congress passed the Tax Cuts and Jobs Act, sending the bill to President Donald Trump’s desk for his signature. This was an historic step to advance the most substantial reform to the U.S. tax code in decades.

Overall, the tax package will be positive for American oil and natural gas producers, with all of the major current tax provisions supporting production retained in the tax code, including the Intangible Drilling Cost deduction and Percentage Depletion deduction – key issues IPAA has worked to educate lawmakers and the public about over the last decade and throughout the current tax reform debate. IPAA President and CEO Barry Russell applauded the vote, stating:

“The U.S. oil and natural gas industry is a capital-intensive industry. We’re pleased to see the final bill includes pro-growth measures that support the unique nature of our businesses, while allowing producers to continue investing billions of dollars back into American energy and the U.S. economy. Meaningful tax policies including strong cost-recovery provisions (like full expensing of capital expenditures), repealing of the corporate Alternative Minimum Tax, and lowering corporate rates will help our member companies reinvest into new production and innovative technologies that will keep American energy affordable for U.S. consumers and create opportunities for the U.S. workforce.”

The tax reform package includes a number of pro-business actions that support American energy and the economy. Items include:

  • Lowering the corporate tax rates from 35% to 21%
  • Repealing the corporate Alternative Minimum Tax
  • Allowing for full expensing of capital investments for five years
  • Creating a net operating loss carryforward structure and revising the structure of international taxation
  • Revising individual tax policy providing for lower rates and restructuring the tax treatment of pass-through entities in an effort to make them closer to corporate taxation

These changes are a positive step for the economy and American energy development. Moving forward, the tax bill will move to the President’s desk for signature. IPAA will continue work with Congress and the Trump administration on any necessary corrections and to address issues that may have been missed in the final tax negotiations.